The decline of most 'AI winner' stocks points to a more selective investor mood.

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Most of the stocks that got caught up in last year's hype about artificial intelligence have fallen this year, suggesting investors are increasingly trying to separate the wheat from the chaff among companies claiming to benefit from the AI ​​trend. are trying

Massive share price rallies for high-profile groups such as Nvidia, which this week became the world's most valuable listed company, have fueled a growing debate about whether US stock market speculation Running through

But recent declines in dozens of stocks that benefited from the initial excitement suggest that investors are starting to see past optimistic commentary if companies can't back up their claims.

“AI is still a big theme but if you can't show evidence, you're hurting,” said Stuart Kaiser, head of U.S. equity trading strategy at Citi. “Just saying 'AI' 15 times isn't going to cut it anymore.”

About 60 percent of stocks in the S&P 500 have gained this year, but more than half of the stocks in Citi's “AI Winners Basket” — an index based on the names that generated the most excitement among the bank's clients last year were More than three-quarters of companies in the Denied AI basket climbed by 2023.

Investment funds that have tried to choose a wider range of AI beneficiaries have had a similar experience. More than half of individual stocks in BlackRock's Robotics and Artificial Intelligence ETF, Invesco's AI and Next Gen Software Fund, and First Trust and Nasdaq's Artificial Intelligence and Robotics ETF have fallen this year.

Mona Mahajan, senior investment strategist at Edward Jones, said: “Investors are looking at the earnings story a bit more among the 'AI' names. The differentiator with something like Nvidia is that they have Showing real data delivered on the bottom line.

Nvidia has more than doubled in value this year, after more than tripling in 2023, and its market cap now exceeds $3tn. However, such is the massive demand for its graphics processing units that, measured as a multiple of its sales over the past 12 months, the stock is actually cheaper this time than it was last year.

In contrast, tech groups such as Salesforce, Snowflake, Intel and Adobe — which are now much smaller than Nvidia by market value, but are classified as large-cap stocks — are set to gain sharply in 2023 after strong gains. are fallen

“The bar in tech was pretty high. [in earnings season] And if you miss that bar, you get hit hard,” said Citi's Kaiser. Salesforce suffered its worst one-day decline in 20 years after posting a disappointing quarterly update last month.

While some have taken the shift as a sign of a return to rationality, Rob Arnott, chair of asset manager Research Affiliates, said the AI-linked rally still “looks like a classic bubble to me”.

“One of the things about a classic bubble is that you see the smaller players before the bigger players start to suffer,” he said.

Arnott emphasized that he believes in the long-term impact of AI, but said that “a lot of the benefits are going to be incremental, and the market is pricing in the immediate”.

Video: AI: Blessing or Curse for Humanity? | FT Tech
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