AI Made the Stock Market Move In 2023. Can It Do the Same in 2024? – The Average Joe

    AI Made the Stock Market Move In 2023. Can It Do the Same in 2024?

    Victor Lei — Head of Research

    December 19, 2023

    December 19, 2023

    If 2023 was the year of artificial intelligence, 2024 might witness the industry reaching new heights… or flopping harder than a Marvel movie. OpenAI’s ChatGPT was released just over a year ago, kicking off a pivotal phase for artificial intelligence (AI) — and the stock market.

    The year in AI summed up: It’s been a journey of record-breaking AI investments, chip shortages, monthly reports on how robots will steal everyone’s jobs and constant announcements from big tech companies trying to one-up each other with new AI models and chatbots. Did we mention the eye-popping stock price returns?

    • The tech-heavy Nasdaq-100 rose 53% YTD to record highs — with the top nine ****companies in the index having launched or started work on AI-related products.
    • Together, they represent ~40% of the Nasdaq, led by giants like Nvidia (NASDAQ:NVDA) and Meta (NASDAQ:META), up 243% and 186% YTD, respectively.

    And with all that growth, investors wonder if they can take the momentum into next year.

    Where’s AI going in 2024?

    In the third quarter alone, more than 30% of S&P 500 companies mentioned “AI” on their earnings calls, demonstrating the wide appeal of the AI boom. But figuring out which companies can benefit won’t be easy — especially with high-flying AI names like Adobe (NASDAQ:ADBE) landing on Citi’s list of AI beneficiaries and Bank of America’s list of AI companies to bet against.

    • According to a December Bloomberg survey, 67% of respondents think AI holds the “most promise” for personal investment — topping cybersecurity (20%) and weight-loss drugs (8%).
    • Capital Economics adds, “If AI enthusiasm is inflating a bubble in the S&P 500, it’s one that is still in its early stages” (YF!) — potentially propelling the S&P 500 to their 2024 year-end forecast of 5,500 (~16% increase).

    The bubble debate: With 2024 just around the corner, analysts are mixed on whether or not the hype will continue or fizzle out next year — and many are curious if companies can turn hype into revenue. Valuations are also becoming a big focus, with Research Affiliates’ founder Rob Arnott cautioning “while some AI stocks may exceed the extraordinary success priced into their shares, history teaches most will fail to do so” (FT).

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