Nasdaq hits record high after Broadcom makes bid for tech's biggest deal ever with Qualcomm

The Nasdaq composite hit a record high on Monday after Broadcom made a $130 billion offer to buy Qualcomm.

The tech-heavy index rose 0.2 percent and outperformed the S&P 500, which also eked out a record. The Dow Jones industrial average traded just 5 points lower.

Broadcom offered to buy fellow chip maker Qualcomm for $70 a share. If completed, the deal would be the biggest in the history of the tech sector. Reports of a potential bid first surfaced on Friday.

Qualcomm rose 5.1 percent while Broadcom gained 2.7 percent. Their rise helped the VanEck Vectors Semi ETF (SMH) hit an intraday record high.

"Short term, this is a positive. A takeover by Broadcom would take some stock off the market," said Bruce Bittles, chief investment strategist at Baird. "Also, an offer like that suggests Broadcom feels pretty confident about its future."

The proposed deal comes after President Donald Trump said last week that Broadcom would move its headquarters to the U.S. from Singapore. However, Qualcomm is expected to resist the offer.

"I'm not sure they'll get it for $70, but it's clear from the press release that Broadcom really wants to buy this company," Romit Shah, managing director at Nomura Instinet, told CNBC's "Squawk Box." "Their CEO usually gets what he wants and we think ultimately they will strike a deal.

Elsewhere, shares of Advanced Micro Devices jumped on a report that the company will team up with Intel to compete with Nvidia in the laptop gaming chip market.

AMD traded 5.9 percent higher was the best performer in the XLK. Intel rose 0.5 percent, while Nvidia shares slipped 0.3 percent.

Last week, the Dow Jones industrial average, S&P 500 and Nasdaq composite all finished at record highs, boosted by the first reports of the potential Broadcom-Qualcomm deal as well as strong Apple earnings.

Earnings season moved forward on Monday, with CVS Health, Michael Kors and Mylan among the companies that reported before the bell.

Overall, it has been a very solid earnings season. Analysts at Credit Suisse said in a note that earnings are beating estimates by 6.1 percent, with 70 percent of S&P 500 companies topping bottom-line estimates.

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