AI Company Stocks Keep the Market Higher Than Fundamentals Indicate It Should Be
In what is yet another example of what an upside down world we are currently living in, comes the story of the bull and bear stock market that can’t make up its mind which it is.
And what exactly is the difference between a bear market and a bear economy? The article from cnn.com tries to explain it all.
“The bear market is over. But the bear economy isn’t. The eurozone has sunk into recession and some economists fear the United States is next. We’re worrying about rate hikes, inflation, lower spending, layoffs, surging mortgage costs, and a war in Europe.”
Bull markets tend to have investors stampeding forward with investments as the economy takes off, but the current bear market shows no such sign. Instead, one sector is driving the optimism—AI. Just a handful of huge tech companies with heavy AI investment are the tail wagging the dog of a market, so to speak. According to CNN:
“After a horrible year for Big Tech in 2022, optimism has returned as ChatGPT has made AI the it-thing in Silicon Valley. Investors are placing big bets on Alphabet, Meta (META), Apple (AAPL), Amazon (AMZN), Nvidia (NVDA), Tesla, and others, hoping they can drive a new tech revolution with artificial intelligence.”
Those companies are having huge surges in stock valuation: Nvidia’s stock is up 163%, Meta is up 120%, Tesla is up 90%. Also, Apple, Amazon, and Google are all up 40% or more.
Stock buyers are snapping up the big stocks, but smaller companies are not doing so well. Real estate, materials, energy and financial markets are all down, according to analysts.
While the S&P 500 is up about 12%, that could level off. Less than a quarter of the stocks in the S&P 500 are beating the index.
read more at cnn.com