HT TECH wants to start sending you push notifications. Click allow to subscribe

Investors Are Happy to Pay Premium for Tech, But Not for AI

Investors on Wall Street and beyond are betting that the great tech rally of 2023 has staying power, even as they appear skeptical that the artificial-intelligence era will live up to the hype.

By: BLOOMBERG
Updated on: Jul 31 2023, 07:03 IST
Microsoft’s AI service known as Copilot integrates into its ubiquitous Microsoft 365 software suite, using generative AI to more efficiently compose emails, summarize documents, or crunch numbers. (AFP)
Microsoft’s AI service known as Copilot integrates into its ubiquitous Microsoft 365 software suite, using generative AI to more efficiently compose emails, summarize documents, or crunch numbers. (AFP)

Investors on Wall Street and beyond are betting that the great tech rally of 2023 has staying power, even as they appear skeptical that the artificial-intelligence era will live up to the hype.

Some 77% of the 514 respondents to the latest Markets Live Pulse survey are planning to either increase their exposure to technology stocks or keep it steady over the next six months. Meanwhile, less than 10% see a bubble in the sector bursting anytime soon. That bullishness has pushed the Nasdaq 100 to its best first half in history, ramping up market valuations and blindsiding pros on the Street.

You may be interested in

Mobiles Tablets Laptops
7% OFF
Apple iPhone 15 Pro Max
  • Black Titanium
  • 8 GB RAM
  • 256 GB Storage
₹148,900₹159,900
Buy now
23% OFF
Samsung Galaxy S23 Ultra 5G
  • Green
  • 12 GB RAM
  • 256 GB Storage
₹115,999₹149,999
Buy now
Google Pixel 8 Pro
  • Obsidian
  • 12 GB RAM
  • 128 GB Storage
₹106,998
Check details
Apple iPhone 15 Plus
  • Black
  • 6 GB RAM
  • 128 GB Storage
₹87,900
Check details
21% OFF
Acer Swift Go SFG14 41 NX KG3SI 002 Laptop
  • Pure Silver
  • 8 GB RAM
  • 512 GB SSD
₹58,990₹74,999
Buy now
39% OFF
Acer Aspire 5 A515 57G Laptop
  • Gray
  • 16 GB RAM
  • 512 GB SSD
₹54,949₹89,999
Buy now
22% OFF
Acer Aspire 3 A315 24 NX KDESI 004 Laptop
  • Silver
  • 8 GB RAM
  • 512 GB SSD
₹33,499₹42,999
Buy now
39% OFF
Asus VivoBook 15 X515JA BQ322WS Laptop
  • Transparent Silver
  • 8 GB RAM
  • 512 GB SSD
₹31,490₹51,990
Buy now
34% OFF
Xiaomi Pad 6
  • Mist Blue
  • 6 GB RAM
  • 128 GB Storage
₹26,299₹39,999
Buy now
55% OFF
Lenovo Tab M10 5G
  • Abyss Blue
  • 6 GB RAM
  • 128 GB Storage
₹20,999₹47,000
Buy now
32% OFF
Realme Pad 2
  • Imagination Grey
  • 6 GB RAM
  • 128 GB Storage
₹19,790₹28,999
Buy now
Honor Pad X9
  • Gray
  • 4 GB RAM
  • 128 GB Storage
₹14,999
Check details

Yet while survey participants are likely riding the AI-fueled market melt-up thanks to their broad equity exposure, they aren’t going all-in on the technology just yet. Half are disinclined to pay out of their own pocket for AI tools to aid their personal or business life, while a majority of firms aren’t planning on using them for trading or investing ahead.

Also read: Looking for a smartphone? To check mobile finder click here.

All that underscores the challenge for companies to generate profits anytime soon from their big investments in the era of OpenAI Inc.’s ChatGPT.

“Right now, the near-term hype is over its skis,” said Ted Mortonson, a technology strategist at Robert W. Baird & Co.

The Nasdaq 100 has soared more than 40% year-to-date, led by the likes of Apple Inc. and Microsoft Corp., as demand for futuristic tech booms. The benchmark now trades at about 25 times estimated earnings, above its 10-year average of almost 21. And senior corporate executives are talking more about AI this earnings season and less about an oncoming recession.

Unlike during the dot-com bubble of the 2000s, AI isn’t entirely based on speculation, given the slew of practical applications that are already in the works, albeit in the early stages. Industry titans have charged ahead with new AI products, hoping to entice corporate clients with tools to boost productivity. Microsoft’s Copilot service integrates into its ubiquitous Microsoft 365 software suite, using generative AI to more efficiently compose emails, summarize documents or crunch numbers.

Microsoft plans to charge $30 a month for the Copilot service. That’s poised to see competition from Alphabet Inc., which is integrating AI features into its own Workspace apps like Gmail and Google Docs. The Google parent company is also introducing new products for advertisers and is testing a tool for news organizations that use AI to write articles.

Nvidia Corp. has become the poster child of the frenzy given its processors are used in computers that power AI applications, rallying more than 200% this year alone. It’s the first chipmaker to boast a $1 trillion market valuation and 29% of MLIV Pulse respondents reckon it’s on course to become the second- to fourth-largest company in the world within the next two years, from the sixth-largest currently.

Yet even as AI makes its way to the workplace, 64% are dismissive of the idea that the new technology will perform core aspects of their job within the next three years. Meanwhile Goldman Sachs Group Inc. economists earlier this year estimated that seven in 10 US workers would see their jobs impacted by AI, yet just a small share of those would see their positions replaced by new technologies. Goldman said office and administrative support and legal functions were among the sectors most at risk.

With oncoming advances in AI, robotics and quantum computing, Ed Yardeni, president at Yardeni Research, said there is a “reasonable” chance that the US economy booms on productivity gains.

“I think this is going to turn out to be something like the Roaring 2020s,” he said in an interview on Bloomberg Television.

Follow HT Tech for the latest tech news and reviews , also keep up with us on ,Twitter, Facebook, , and Instagram. For our latest videos, subscribe to our YouTube channel.

First Published Date: 31 Jul, 07:02 IST

Sale

Mobiles Tablets Laptops
17% OFF
OPPO F25 Pro
  • Lava Red
  • 8 GB RAM
  • 128 GB Storage
₹23,999₹28,999
Buy now
7% OFF
Apple iPhone 15 Pro Max
  • Black Titanium
  • 8 GB RAM
  • 256 GB Storage
₹148,900₹159,900
Buy now
8% OFF
Apple iPhone 15 Plus
  • Black
  • 6 GB RAM
  • 128 GB Storage
₹82,999₹89,900
Buy now
3% OFF
Samsung Galaxy Z Fold5
  • Icy Blue
  • 12 GB RAM
  • 256 GB Storage
₹154,999₹159,999
Buy now
33% OFF
Xiaomi Pad 6
  • Mist Blue
  • 6 GB RAM
  • 128 GB Storage
₹26,999₹39,999
Buy now
31% OFF
Realme Pad 2
  • Imagination Grey
  • 6 GB RAM
  • 128 GB Storage
₹19,999₹28,999
Buy now
51% OFF
Lenovo Tab M9
  • Frost Blue
  • 3 GB RAM
  • 32 GB Storage
₹6,900₹14,000
Buy now
57% OFF
Honor Pad X8
  • Blue Hour
  • 3 GB RAM
  • 32 GB Storage
₹8,999₹20,999
Buy now
17% OFF
Acer Aspire 3 A315 24 NX KDESI 004 Laptop
  • Silver
  • 8 GB RAM
  • 512 GB SSD
₹35,700₹42,999
Buy now
37% OFF
Acer Swift Go SFG14 41 NX KG3SI 002 Laptop
  • Pure Silver
  • 8 GB RAM
  • 512 GB SSD
₹49,839₹78,999
Buy now
43% OFF
Acer Aspire 5 A515 57G Laptop
  • Gray
  • 16 GB RAM
  • 512 GB SSD
₹50,990₹89,999
Buy now
12% OFF
Asus VivoBook 15 X515JA BQ322WS Laptop
  • Transparent Silver
  • 8 GB RAM
  • 512 GB SSD
₹35,989₹40,990
Buy now
NEXT ARTICLE BEGINS