Will AI-driven big-techs lead to a new "baby bubble"?
Last week, analysts from $Bank of America(BAC)$ researched stocks in the field of artificial intelligence and they believe that the AI hype is a "baby bubble" (early stage bubble), comparing it to other bubble periods.
They likened this year's best-performing stocks to the "Magnificent Seven" in the movie, which have risen 61% since the beginning of the year. These include $Apple(AAPL)$ $Microsoft(MSFT)$ $Alphabet(GOOG)$ $Amazon.com(AMZN)$ $NVIDIA Corp(NVDA)$ $Meta Platforms, Inc.(META)$ $Tesla Motors(TSLA)$ These seven stocks have driven up indices.
Although there is an inferred correlation between them, there is still some gap to be filled. Therefore, there seems to be some connection between strong performance by large tech companies over recent months and last week's A.I. frenzy.
Many people see this narrow rise as a sign of an impending stock market crash, especially after bank liquidity crises. However, this has not happened over the past two months. One important reason why investors are optimistic about tech stocks under AI hotspots is that these companies are reducing costs while increasing efficiency by cutting jobs on one hand and investing more in AI on the other.
Goldman Sachs also stated that over the past month, enthusiasm for artificial intelligence has been very apparent with perceived winners doing a lot of rough work. The market also revealed its attitude...it believes that S&P index's highest-ranking and largest-cap companies such as Microsoft, Google and Nvidia will benefit most from it.
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