The sustained interest in artificial intelligence technologies following the launch of ChatGPT last year has created an unprecedented boom in the stock market. As per the latest calculations, the market value of the top seven companies with a stake in AI technologies has zoomed to $11 trillion, registering a staggering 60 percent growth so far this year.
Technological Behemoths
These companies are technological behemoths listed on the US stock markets — Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Nvidia and Tesla. So far this year, the combined market capitalization of these companies has grown about $4 trillion, fulled by the hype in artificial intelligence technologies.
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Earlier reports had clearly said that artificial intelligence may help S&P 500 companies increase their profits significantly in the next 10 years. “Over the next 10 years, AI could increase productivity by 1.5% per year. And that could increase S&P500 profits by 30% or more over the next decade,” a report by Goldman Sachs said in May.
Key Driver of Earnings
“One way to get exposure to AI is through the ‘Magnificent Seven’ – Amazon, Alphabet (Google), Apple, Meta, Microsoft, Nvidia, and Tesla … These companies all play a key role in the development and application of AI, but it worth remembering that the key driver of their earnings is still not AI,” Saxo Bank said in its quarterly outlook, according to Yahoo Finance.
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The US stock markets saw a rare rally in recent months, fuelled by the bullish sentiments over AI’s impact on businesses and profits. A recent Societe Generale analysis found that if some 20 stocks whose ownership is tied to AI-related exchange-traded funds were removed from S&P500, the index would report a 40 percent drop this year.
Latest Frenzy
Another report said in May that AI-linked stocks added about $300 billion in market capitalization following the latest frenzy in the market. According to a Reuters report earlier, the stocks of Microsoft, Google parent Alphabet, Nvidia, Apple and Meta Platforms together accounted for the S&P 500’s rally this year. Nearly 50 percent of the gains were due to the buzz around artificial intelligence, said Jessica Rabe, co-founder of DataTrek Research, according to the agency.
While Apple’s market capitalization went past the sensational $3 trillion mark earlier this month, analysts expect that the market cap of Microsoft is also slated to hit that level soon.
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Another stock that recorded outsize growth this year is Nvidia, which has surged about 200 perent this year. While Nvidia broke through the $1 trillion mark, the wealth of its CEO Jensen Huang rose to $39 billion, making him the 34th richest person in the world.
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Following the emergence of ChatGPT, several other tech giants like Google, Meta and Amazon have also launched cutting edge AI tools. Companies around the world are projecting the large scale integration of AI tools into business strategies.
