AI has been continuing to rise in popularity, even in light of current economic challenges. The impressive development of generative AI, which can produce computer code and conversations that are close to human-like, has given investors an exciting new opportunity. As a result, tech stocks such as Nvidia and Meta Platforms have shot up to incredible heights in recent months, with many reaching near-trillion dollar market capitalizations.
Nvidia, a chip maker that supports the development of AI technology, has seen an incredible 24% increase in Thursday’s stock prices alone, due to a positive sales and profit outlook that passed Wall Street’s expectations. Another big tech company, Microsoft, also announced a whopping $10 billion investment to OpenAI, the creator of the chatbot app ChatGPT.
The reaction to AI has also reached beyond the stock market, attracting attention from lawmakers in Washington who are pushing for appropriate regulations of the technology. While some fear that the stock market’s appreciation of AI may be a bubble, others are reassured. The appreciation of the technology is centered on established and reliable blue-chip stocks, rather than riskier startups.
Stocks such as Nvidia, Microsoft, and Meta technology have seen gains of over 100%, and even the overall S&P 500 index would be down for the year without the aid of the largest tech stocks. With the current IPOs market being largely dormant this year, the appreciation of these stocks continues to fuel the rally.
Damped Spring Advisors’ Andy Constan points out, however, that the AI bull run will only last if the technology can prove its worth over the long run. While there is excitement around the new technology, investors must be aware of the potential risks and limitations. With attention already being placed on AI by the government, it is important to account for regulations when making investments. 2018 marks a fascinating point in history, for artificial intelligence and the stock market alike.
