Last year on Wall Street, both the Dow Jones, the S&P 500, and the Nasdaq posted their first annual decline since 2018., in fact the technology index collapsed more than 30%. This year the technological began to recover and, so far this year, they are already up 24%. How have the industry giants fared and what may happen in the short term?
Microsoft went up so far this year 38.1% from US$239.82 to US$331.21. It should be noted that in January the company had announced a new multimillion-dollar investment agreement with OpenAI, developer of ChatGPT. Just a few days ago, the company held the Microsoft Build 2023 event where it presented a series of announcements that have Artificial Intelligence as the main protagonist.
For his part, Alphabet rose 40.2% in the first 5 months of the year from US$88.23 to US$123.67. The company presented its AI chatbot this year, called Bard, which, although it had a somewhat complicated launch, did not harm the company’s share price, which continued to rise. Alphabet was also recognized for introducing enterprise AI tools and infrastructure through its Google cloud computing unit.
Meta climbed 120% in 2023 from US$120.34 to US$264.72. The company that was born as a social network has just launched a new artificial intelligence tool called ImageBind that is capable of relating seven sources of sensory data: images, video, audio, text, depth, temperature and movement. Meta also announced that it remains committed to research and development in the field of artificial intelligence.
Amazon rose 43.6% so far this year from US$84 to US$120.58. In the first quarter, the company’s revenue increased 9% compared to the end of 2022. Its main driver of earnings was Amazon Web Services, the collection of public cloud computing services, which also uses artificial intelligence to optimize its functioning.
Apple advanced 36.4% from $129.9 to $177.25, so far in 2023. The company’s revenue between January and March came in at $94.8 billion. For its part, the sale of iPhones grew more than expected. Billing from the sale of smartphones was above forecasts, reaching US$51.3 billion in the first quarter of the year.
Why are they going up and what is going to happen in the short term?
During 2022, technology companies suffered sharp declines. What happened is that there was an unfavorable world context, where it became evident a sharp rise in inflation both in the United States and in Europe and a significant rate hike by the FED and the ECB to try to contain prices. Thus, the stock market returns of these companies suffered due to the increase in the cost of financing.
Consulted by Scope, Rafael Di Giorno, Director of Proficio Investmentsaid that “the Nasdaq was punished enough last year and is recovering this year hand in hand with the ‘price’ market that at some point the Fed will stop raising interest rates.” He also considered that “artificial intelligence is definitely a driver” that influenced this year.
As to how much will happen in the short term with the performance of these companies, he said, it will depend on whether, indeed, the prediction of a more dovish Fed comes true. “In 2024 they already forecast a rate drop of 150 points”, which, he defined, would be beneficial for the Nasdaq.
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