Last time tech stocks had a better first half, Apple was offering his Lisa desktop computer, IBM was the most valuable technology company in the US and Mark Zuckerberg was not born

On Friday, the Nasdaq ended the first six months of the year up 1.5%, extending its year-to-date gains to 32% for 2023. That’s the tech-heavy index’s sharpest first-half jump since 1983, when the Nasdaq rose 37%.

Considering what has happened in the tech industry over the last four decades, this is a surprising achievement. Microsoft went public in 1986, sparking a computer software boom. Then came the Internet browsers of the 1990s, leading to dot-com bubbles and soaring stock prices in e-commerce, search and computer networking. The past decade has seen the emergence of mega-cap, trillion-dollar companies that are now the most valuable businesses in the US.

While these previous eras featured sustained rallies, none of them had a 2023 start.

What’s even more amazing is that it’s happening this year, while the US economy is still in danger of slipping into recession and counting on the banking crisis he highlighted the collapse of Silicon Valley Bank in Marchthe financial core of much of the business a startup world. The Federal Reserve also kept raising its benchmark interest rate to level the highest since 2007.

But momentum is always a driver when it comes to tech, and investors are notoriously wary of missing out even as they worry about frothy valuations.

After a miserable 2022 in which the Nasdaq lost one-third of its value, the big story was cost-cutting and efficiency. Mass layoffs at AlphabetMeta a Amazon as with many smaller companies, it paved the way for a recovery in earnings and a more realistic growth outlook.

Meta a Teslaboth of which were hammered last year, have so far more than doubled in 2023. Alphabet is up 36% after falling 39% in 2022.

None of these companies was the last time the Nasdaq had a better start to the year. CEO Meta Zuckerberg, who created the company formerly known as Facebook in 2004, was born in 1984. Tesla was founded in 2003, five years after Google, Alphabet’s predecessor.

As 2023 dawns, attention turns to artificial intelligence and a flurry of activity around generative AI chatbots that respond to text queries with intelligent, conversational responses. Microsoft-backed OpenAI became a household name (and was #1 on CNBC’s Disruptor 50 list) with their ChatGPT program and the dollars are pouring in Nvidiawhose chips are used to power AI tasks in many companies using the latest enhancements.

Nvidia shares soared 190% in the first half, pushing the 30-year-old company’s market cap above $1 trillion.

“I think you’re going to continue to see technology dominate because we’re still all excited about artificial intelligence,” Bryn Talkington, managing partner at Requisite Capital Management, said in an interview on CNBC’s “Closing Bell” on Thursday.

Talkington, whose firm holds shares in Nvidia, said the chipmaker has a unique story and that its growth is not shared across the industry. Rather, big companies working on AI have to spend a lot on Nvidia technologies.

“Nvidia not only owns the shovels and axes of this AI gold rush,” Talkington said. “They’re actually the only hardware store in town.

Apple’s gains haven’t been as dramatic, but shares are still up 50% this year, trading at record highs and pushing the iPhone maker toward a $3 trillion market cap.

Apple still counts on the iPhone for most of its revenue, but its latest leap into virtual reality with an announcement this month Headset Vision Pro helped revive investor enthusiasm. It was the first major release of an Apple product since 2014 and will be available starting at $3,499 early next year.

That sounds like a lot, except compared to the price tag for the first Lisa computer that Apple launched 40 years ago. That PC, named after the co-founder Steve Jobs’ daughter, started at $10,000, keeping it out of the reach of mainstream consumers.

Apple’s revenue in 1983 was roughly $1 billion, roughly the amount of money the company will make on an average day in the first quarter of 2023 (Apple’s fiscal second quarter).

Tech was the clear story for equity markets in the first half, as the broader S&P 500 posted a 16% gain and the Dow Jones Industrial Average rose just 2.9%.

Investors looking for red flags heading into the second half don’t have to look far.

Global economic concerns remain, highlighted by and continuing uncertainty surrounding the war in Russia and Ukraine trade tensions with China. Short-term interest rates are now above 5%, meaning investors can cash in risk-free returns in the mid-single digits from certificates of deposit and high-yield savings accounts.

Another sign of skepticism is the absence of an IPO technology market, as emerging companies continue to be left out despite enthusiasm across the industry. There have been no major venture-backed tech IPOs in the U.S. since the end of 2021, and investors and bankers are telling CNBC that the second half of the year is poised to remain quiet as companies wait for better predictability of their numbers.

Jim Tierney, chief investment officer of U.S. concentrated growth at AllianceBernstein, said on CNBC’s “Power Lunch” Friday that there are plenty of challenges for investors to consider. Like Talkington, he’s not sure how much benefit AI is currently experiencing in the wider corporate world.

“If we get specifically to AI, I think we have to see the benefit for all companies,” Tierney said. “It will come, I’m just not sure it will happen in the second half of this year.

At the same time, the economic data is mixed. AND survey earlier this month, CNBC and Morning Consult found that 92% of Americans are cutting back on spending as inflationary pressures persist.

“The fundamentals are harder,” Tierney said. “When you look at consumer spending today, the consumer is pulling back. All of that suggests the fundamentals here are more stretched than not.”

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