{"id":11310,"date":"2023-05-20T06:12:34","date_gmt":"2023-05-20T10:12:34","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/artificial-intelligence-gives-real-boost-to-u-s-stock-market\/"},"modified":"2023-05-20T06:12:35","modified_gmt":"2023-05-20T10:12:35","slug":"artificial-intelligence-gives-real-boost-to-u-s-stock-market","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=11310","title":{"rendered":"Artificial intelligence gives real boost to U.S. stock market"},"content":{"rendered":"
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\u00a9 Reuters. FILE PHOTO: The floor of the the\u00a0New\u00a0York\u00a0Stock\u00a0Exchange\u00a0(NYSE) is seen after the close of trading in\u00a0New\u00a0York, U.S., March 18, 2020. REUTERS\/Lucas Jackson\/File Photo<\/span>
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By Lewis Krauskopf<\/p>\n

NEW YORK (Reuters) – Recent advances in artificial intelligence are fueling optimism over how businesses can operate more productively in the years ahead. They are also providing a big boost to the stock market.<\/p>\n

The ‘s 9% rally this year has been driven by a handful of the index’s biggest stocks, a number of which are at the center of the AI frenzy that has spread in the wake of the chatbot sensation ChatGPT.<\/p>\n

Five stocks – Microsoft (NASDAQ:), Google parent Alphabet (NASDAQ:), Nvidia (NASDAQ:), Apple (NASDAQ:) and Meta Platforms – are responsible for the S&P 500’s entire year-to-date return, said Jessica Rabe, co-founder of DataTrek Research.\u00a0About 25% to 50% of those gains are owed to “the buzz around artificial intelligence,” she noted.<\/p>\n

A recent Societe Generale (OTC:) analysis zeroed in on 20 stocks widely owned by AI-related exchange-traded funds, whose overall assets under management have grown almost 40% this year.<\/p>\n

Removing those stocks from the S&P 500 would reduce the index’s performance by roughly 10 percentage points, putting stocks in negative territory for the year, SocGen’s analysis showed.<\/p>\n

“It’s the AI-driven stocks that are getting the strongest returns,” said Manish Kabra, head of US equity strategy at SocGen. “As a secular theme, for sure, it’s attractive.”<\/p>\n

The rush of AI developments has analysts licking their lips at the profit potential stemming from new revenue opportunities and productivity improvements. <\/p>\n

Goldman Sachs (NYSE:) strategists estimate that generative AI could create productivity gains that result in S&P 500 companies expanding profit margins by about 4 percentage points in a decade following widespread adoption.<\/p>\n

Indeed, optimism over AI is a key factor supporting a stock market facing numerous headwinds. Those include uncertainty over the U.S. Congress coming to agreement to raise the debt ceiling and avoid a default, and worries the economy may be on the verge of a downturn, as the Federal Reserve’s interest rate hikes filter through the economy.<\/p>\n

“We are strongly of the view that AI will change the world,” Jim Reid, strategist at Deutsche Bank <\/span><\/span> (ETR:), said in a note titled, “Will ChatGPT prevent the US recession?”<\/p>\n

The AI excitement has helped propel hefty gains for some stocks. For example, shares of Microsoft, the second-largest U.S. company by market value, have climbed 32% this year. The software giant has grabbed headlines with its partnership with ChatGPT creator OpenAI and sprucing up its Bing search engine with AI.<\/p>\n

Shares of Nvidia, the fifth-biggest U.S. company by market value whose chips are central in the AI excitement, have soared 110% this year.<\/p>\n

The Global X Robotics & Artificial Intelligence ETF has jumped nearly 30% this year.<\/p>\n

Investors next week will be keeping an eye on developments regarding the U.S. debt ceiling, as well as inflation data and corporate earnings including results from Nvidia.<\/p>\n

Other factors have supported megacap stocks. Those include a decline in Treasury yields from last year’s highs that has soothed concerns over tech valuations and investors viewing megacaps as safety plays in an uncertain environment.<\/p>\n

At the same time, even the shares of potentially transformative technologies are vulnerable to price bubbles, as history shows. A dotcom stock mania helped markets roar higher in the late 1990s, but a crash followed a few years later, leaving only a handful of internet names standing.<\/p>\n

A BofA Global Research report published Friday said AI stocks were in a “baby bubble” in comparison with far larger asset price moves seen in areas such as internet stocks and bitcoin over the last few decades.<\/p>\n

Nonetheless, many investors say that AI is no fad. <\/p>\n

King Lip, chief strategist at Baker Avenue Wealth Management in San Francisco, calls the developments in AI a “game changer.” His firm owns shares of Microsoft, Nvidia and Alphabet. <\/p>\n

“It goes beyond the next shiny object,” Lip said. “The path is pretty clear on how generative AI can lead to earnings growth for these companies.” <\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a9 Reuters. FILE PHOTO: The floor of the the\u00a0New\u00a0York\u00a0Stock\u00a0Exchange\u00a0(NYSE) is seen after the close of trading in\u00a0New\u00a0York, U.S., March 18, 2020. REUTERS\/Lucas Jackson\/File Photo By Lewis Krauskopf NEW YORK (Reuters) – Recent advances in artificial intelligence are fueling optimism over how businesses can operate more productively in the years ahead. They are also providing a […]<\/p>\n","protected":false},"author":1,"featured_media":800,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[1],"tags":[83],"class_list":["post-11310","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-uncategorized","tag-featured","post_format-post-format-video"],"yoast_head":"\nArtificial intelligence gives real boost to U.S. stock market | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u00a9 Reuters. 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