Generative AI is set to revolutionize the tech landscape, according to a comprehensive report published by RBC Capital Markets. The report highlights generative AI as the fourth major technological revolution in the past 40 years, following the launch of Netscape for the internet, Salesforce and Amazon Web Services for the cloud, and the iPhone for mobile technology. The mainstream arrival of generative AI came with the launch of ChatGPT last November. RBC Capital Markets predicts that generative AI will have significant implications not only for the technology sector but for society as a whole.
As a result of this outlook, RBC Capital Markets has shared its top stock picks for companies it believes are positioned to leverage generative AI. These include Adobe Systems Inc., Confluent Inc., Coursera Inc., Crowdstrike Holdings, Coveo Solutions, Clearwater Analytics Holdings, Elastic NV, Gitlab Inc., Guidewire Software Inc., Hubspot Inc., Mongodb Inc., Microsoft, Cloudflare Inc., Nice Ltd, Servicenow Inc., Shopify, Workday, and Zoom Communications.
Meanwhile, BofA Securities investment strategist Michael Hartnett’s weekly Flow Show report suggests that fear surrounding US Treasury supply and political deficit deniers has caused a yield overshoot, but there is potential for a year-end rally. The report also states that China’s exports to the US have declined by 18% compared to -4% for the rest of the world, largely due to the ongoing US-China trade war. Cash continues to attract significant inflows, with projections indicating a record $1.4tn in 2023.
Scotiabank strategist Hugo Ste Marie offers a recap of S&P 500 earnings, revealing that Q3 earnings per share (EPS) came in at $57.82, surprising investors by surpassing expectations set at the start of the reporting season. Earnings increased by 7.2% sequentially and 5.2% year over year. Most sectors exceeded bottom-up forecasts, with five sectors (Discretionary, Financials, Communications, Tech, and Industrials) surpassing expectations by more than 5%. However, healthcare and utilities sectors missed consensus forecasts. The report also notes earnings weakness among small and mid-cap stocks, along with a disconnect between the S&P 500 EPS beat ratio and the sales beat ratio, indicating potential economic challenges.
Overall, the news highlights the transformative potential of generative AI in the tech industry and beyond. Investors are eyeing companies that are well-positioned to leverage this technology, while also monitoring market trends and geopolitical developments that could impact global markets.