Key points:

  • Recent gains in sectors such as industrials and materials could be a sign that the S&P 500’s rally extends beyond AI companies.
  • The S&P 500 index rose 7.7% in 2024, reaching a record high.
  • Nvidia shares added 4% again.

While Wall Street is enthused by artificial intelligence, some investors are turning to more traditional parts of the market. Value stocks, which typically trade at a discount to book value or P/E ratios, have so far failed to take full advantage of this trend.

However, recently there has been an acceleration in growth in some value-oriented segments such as industrials and commodities. Experts say this may indicate that the S&P 500 rally is expanding beyond a limited number of technology and high-growth companies.

The S&P 500 rally was not only due to AI

While 2024 saw the S&P 500 rise 7.7% to a new record high, it’s not just AI that’s behind the rise.

In particular, the S&P 500 industrials sector posted a 7.1% gain over the past month, helped largely by gains from General Electric and Howmet Aerospace. Overall, the broader market grew 5.8% over the period.

The materials sector also performed impressively, gaining 6.7% in February. The growth leaders in this sector were Vulcan Materials and Ecolab. The consumer discretionary sector (.SPLRCD), which includes companies such as Chiptole Mexican Grill and Ralph Lauren, showed equally strong growth, up nearly 9%.

Nvidia shares continue to rise

Nvidia shares continued to rise, adding 4% after Dell, a maker of servers based on Nvidia processors, announced an upbeat outlook. Dell reported a surge in orders for AI-optimized servers, causing its shares to jump 38% to a record before closing the session up 32%.

Friday’s rally brought Nvidia’s market capitalization to $2.06 trillion, making it the third-largest company on Wall Street, behind Microsoft ($3.09 trillion) and Apple ($2.77 trillion).

Nvidia continues to dominate the high-end AI chip market, holding about 80% of its share.