Overlook concerning the debt ceiling. Tech buyers are in purchase mode.

The Nasdaq Composite closed out its fifth-straight weekly achieve on Friday, leaping 2.5% previously 5 days, and is now up 24% this yr, far outpacing the opposite main U.S. indexes. The S&P 500 is up 9.5% for the yr and the Dow Jones Industrial Common is down barely.

Pleasure surrounding chipmaker Nvidia’s blowout earnings report and its management place in synthetic intelligence expertise drove this week’s rally, however buyers additionally snapped up shares of Microsoft, Meta and Alphabet, every of which have their very own AI story to inform.

And with optimism brewing that lawmakers are near a deal to boost the debt ceiling, and that the Federal Reserve could also be slowing its tempo of rate of interest hikes, this yr’s inventory market is beginning to look much less like 2022 and extra just like the tech-happy decade that preceded it.

“Being concentrated in these mega-cap tech shares has been the place to be on this market,” mentioned Victoria Greene, chief funding officer of G Squared Personal Wealth, in an interview on CNBC’s “Worldwide Change” Friday morning. “You can not deny the potential in AI, you can not deny the earnings prowess that these corporations have.”

To start out the yr, the primary theme in tech was layoffs and value cuts. Most of the largest corporations within the trade, together with Meta, Alphabet, Amazon and Microsoft, had been eliminating hundreds of jobs following a dismal 2022 for income progress and inventory costs. In earnings experiences, they emphasised effectivity and their capacity to “do extra with much less,” a theme that resonates with the Wall Avenue crowd.

However buyers have shifted their focus to AI now that corporations are showcasing real-world purposes of the long-hyped expertise. OpenAI has exploded after releasing the chatbot ChatGPT final yr, and its largest investor, Microsoft, is embedding the core expertise in as many merchandise as it will probably.

Google, in the meantime, is touting its rival AI mannequin at each alternative, and Meta CEO Mark Zuckerberg would a lot somewhat inform shareholders about his firm’s AI developments than the corporate’s money-bleeding metaverse efforts.

Enter Nvidia.

The chipmaker, identified finest for its graphics processing items (GPUs) that energy superior video video games, is using the AI wave. The inventory soared 25% this week to a report and lifted the corporate’s market cap to almost $1 trillion after first-quarter earnings topped estimates.

Nvidia shares at the moment are up 167% this yr, topping all corporations within the S&P 500. The following three prime gainers within the index are additionally tech corporations: Meta, Superior Micro Gadgets and Salesforce.

The story for Nvidia relies on what’s coming, as its income within the newest quarter fell 13% from a yr earlier due to a 38% drop within the gaming division. However the firm’s gross sales forecast for the present quarter was roughly 50% greater than Wall Avenue estimates, and CEO Jensen Huang mentioned Nvidia is seeing “surging demand” for its information heart merchandise.

Nvidia mentioned cloud distributors and web corporations are shopping for up GPU chips and utilizing the processors to coach and deploy generative AI purposes like ChatGPT.

“At this level within the cycle, I feel it is actually essential to not struggle consensus,” mentioned Brent Bracelin, an analyst at Piper Sandler who covers cloud and software program corporations, in a Friday interview on CNBC’s “Squawk on the Avenue.”

“The consensus is, on AI, the massive get greater,” Bracelin mentioned. “And I feel that is going to proceed to be one of the simplest ways to play the AI traits.”

Microsoft, which Bracelin recommends shopping for, rose 4.6% this week and is now up 39% for the yr. Meta gained 6.7% for the week and has greater than doubled in 2023 after dropping nearly two-thirds of its worth final yr. Alphabet rose 1.5% this week, bringing its improve for the yr to 41%.

One of many largest drags on tech shares final yr was the central financial institution’s constant rate of interest hikes. The will increase have continued into 2023, with the fed funds goal vary climbing to five%-5.25% in early Might. However on the final Fed assembly, some members indicated that they anticipated a slowdown in financial progress to take away the necessity for additional tightening, in line with minutes launched on Wednesday.

Much less aggressive financial coverage is seen as a bullish signal for tech and different riskier property, which usually outperform in a extra secure price setting.

Nonetheless, some buyers are involved that the tech rally has gone too far given the vulnerabilities that stay within the financial system and in authorities. The divided Congress is making a debt ceiling deal troublesome because the Treasury Division’s June 1 deadline approaches. Republican negotiator Rep. Garret Graves of Louisiana instructed reporters Friday afternoon within the Capitol that, “We proceed to have main points that we’ve not bridged the hole on.”

Treasury Secretary Janet Yellen mentioned in a while Friday that the U.S. will seemingly have sufficient reserves to push off a possible debt default till June 5.

Alli McCartney, managing director at UBS Personal Wealth Administration, instructed CNBC’s “Squawk on the Avenue” on Friday that following the latest rebound in tech shares, “it is in all probability time to take a few of that off the desk.” She mentioned her group has spent lots of time wanting on the enterprise market and the place offers are taking place, they usually’ve seen some clear froth.

“You are both AI otherwise you’re not proper now,” McCartney mentioned. “We actually should be able to see if we do not get an ideal debt ceiling, if we do not get an ideal touchdown, what does that imply, as a result of at these sorts of ranges we’re undoubtedly pricing within the U.S. hitting the excessive notice on all the things and that looks as if a very precarious place to be given the dangers on the market.”

WATCH: CNBC’s full interview with UBS’ Alli McCartney