Artificial intelligence: Future technology to give S&P 500 half its gains this year, according to JPMorgan analysis

Artificial intelligence is a topic that hardly anyone can ignore at the moment. Companies are rushing into the technology of the future, and the great interest in this topic is also making itself felt on the stock market, as an analysis by the US bank JPMorgan shows.

  • Artificial intelligence currently the trend topic
  • Companies see potential in the technology of the future
  • Analysis shows: Artificial intelligence ensures gains on the stock market

Artificial intelligence seems to be the topic of the day in 2023. AI is finding its way into more and more areas of daily life and, at the latest since Microsoft's billion-euro investment in OpenAI, the provider of the chatbot software ChatGPT, many people have probably already come into contact with the topic.

Companies see great potential in AI
Companies are also currently showing great interest in AI topics and are hoping for bubbling profits from the technology.

For example, Deutsche Presse-Agentur recently reported that technology companies Google and Microsoft, with billions in profits from their core businesses, were heading for a competitive battle on the topic of artificial intelligence. Chief Financial Officer Amy Hood had said after presenting the latest quarterly figures that Microsoft wanted to play a leading role in this field and was also prepared to invest in it, while Google CEO Sundar Pichai had promised users better web searches thanks to AI, among other things.

Evan Spiegel, CEO of Snapchat operator Snap, sees particular potential for his company in generative AI that creates images or text in real time, according to Reuters. The technology could provide valuable services especially in "augmented reality" (AR).

Meta CEO Mark Zuckerberg also sees AI as an "extremely exciting new area." The technology is to be used across all of the group's products, Reuters reports - including in the creation of videos, 3D objects and avatars. "One of my goals for Meta is to become a leader in generative AI," Zuckerberg stressed.

In addition, Apple CEO Tim Cook also sees great potential in the technology. According to Reuters, he explained that the group was using the technology to improve the accident detection of the iPhone and the Apple Watch. He also held out the prospect of the technology being used in all products and services in the medium term. "We see tremendous potential in this area that impacts virtually everything we do," Cook said.

Study: interest in AI creates market capitalization on the stock market
The great interest in artificial intelligence is also making itself felt on the stock market.

According to an analysis by U.S. bank JPMorgan, interest in the technology of the future has accounted for as much as more than half of the gains in the market-wide U.S. S&P 500 index this year, MarketWatch reports. The analysis shows that interest in AI-related issues has created $1.4 trillion in market capitalization and led to gains of 45 percent year-to-date.

The analysis includes Microsoft, Amazon, NVIDIA, Salesforce, Facebook parent Meta Platforms and Google parent Alphabet, which are referred to as "LLM innovation" stocks, he said. The performance of these "LLM Innovations" stocks outperformed the other largest five stocks, which include Apple, Tesla, Berkshire Hathaway, UnitedHealth and JPMorgan, as well as the performance of stocks ranked eleventh through 50th in the S&P 500 and the Russel 2000. In addition, the group accounted for 53 percent of the S&P 500's performance, 54 percent of the NASDAQ 100's performance and 68 percent of growth factor gains.

However, as MarketWatch reports, the JPMorgan team led by analyst Dubravko Lakos-Bujas takes a critical view of this development because, according to the analysts, AI gains combined with a rotation toward safety have resulted in only a few leading stocks in the market. "Defensive rotation and narrowing of growth leadership are typically indicative of a slowing cycle/recession," MarketWatch quoted the analysts as saying.

In addition, the analysts pointed out that the top ten stocks did not necessarily offer the most interesting entry points for investors. For example, stocks 11 to 50 in the S&P 500 have greater valuation support and are trading significantly cheaper than the ten largest players. JPMorgan also sees further scope for rotation into defensive stocks such as healthcare, utilities and consumer staples.

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