AI Stocks Driving Market Momentum Despite Inflation Concerns
AI Stocks are poised to fuel market momentum and defy inflation worries in the coming year. With predictions suggesting that 2024 will be the turning point for generative artificial intelligence, big technology companies are expected to see increased traction, traffic, and revenue.
The influence of AI hype on stock markets has been significant since 2023, with tech giants experiencing a rally in their stocks due to projected growth in AI-related technologies. Market participants are now pricing stocks based more on AI potential rather than inflation numbers.
According to Baird market strategist Michael Antonelli, AI is currently a major driving force behind stock prices, overshadowing concerns about inflation. He highlights that inflation data such as CPI and PPI numbers are not dominating market sentiments for stocks at present.
Tech stocks with AI exposure have seen an overall surge this year, with companies like Nvidia boasting a year-to-date growth of 41% and IBM seeing an increase of 14%. This rise in AI-related tech stocks has contributed to Nasdaq’s 5.3% growth so far this year.
While most publicly listed companies have some form of AI integration, research firm Radio Free Mobile’s founder notes that companies like Google, Meta, and Baidu do not yet have generative AI as a significant revenue contributor. However, predictions suggest that 2024 will mark the beginning of generative AI playing a key role in revenue generation for tech giants.
Investors have been focusing on companies’ AI revenue models, with Meta, Amazon, Apple, Alphabet, Microsoft, Tesla, and Nvidia collectively accounting for 17.2% of the MSCI All Country World Index. The impact of AI is expected to extend beyond individual companies, with artificial intelligence projected to have a greater influence on future financial markets.
Countries worldwide are strategizing to boost AI imports and exports, with the global AI industry expected to grow at a CAGR of 37.3% between 2023 and 2030. Forbes forecasts that China will see the most benefit from AI, with a predicted 26% increase in GDP by 2030. North America is also expected to experience a 14.5% GDP increase during the same period.
In conclusion, AI stocks are set to play a crucial role in driving market momentum, outshining concerns about inflation. With the projected growth of AI technology, investors and market participants are keeping a close eye on how companies leverage AI to generate revenue and fuel further market growth.
