2023 has seen tech stocks surge, with some notable winners such as Nvidia, which became the first chip manufacturer to reach a $1tn market cap.
The NASDAQ index has experienced its highest increase in the first half of the year ever.
Investors are betting big on AI, with a recent Markets Live Pulse survey revealing that a staggering 77% of the 514 respondents are considering either maintaining or increasing their investment in tech stocks over the rest of the year.
Less than 10% believe this is a bubble ready to burst in the immediate future.
Despite that, over half of the respondents were hesitant about incorporating AI into their personal and business workloads, and investors are hesitant to leverage the technology for their investing strategies.
However, that is perhaps immaterial to the fact AI is supporting growth in the tech market right now and is expected to do so for the foreseeable future.
Big tech ramping up AI expenditure
While the AI industry is largely in its infancy, many money-making products are out already, such as ChatGPT’s premium subscription.
Another example is Microsoft’s Copilot product, a part of the ubiquitous Microsoft 365 software suite, which uses generative AI to enhance efficiency in tasks like writing emails, summarizing documents, and analyzing data.
Microsoft plans to charge a monthly fee of $30 for the Copilot service, showing that AI products are relatively straightforward to monetize once built.
However, at the moment, it’s spend, spend, spend, with tech giants like Microsoft looking to load up on hardware and related services. Microsoft plans to increase spending each quarter until 2024.
Alphabet is another company outperforming forecasts this year, reporting net profits of $1.44 a share from April to June, exceeding the forecast of $1.34. Similar to Microsoft, Alphabet expects higher spending in the future as they expand their technical infrastructure to accommodate the demand for AI services.
Alphabet’s CFO Ruth Porat mentioned that this would be the “primary driver” of increased costs as they expand data center capacity, purchase GPUs, and invest in their proprietary TPU accelerator chips.
Companies are stocking up on technology as their stocks rise ahead of forecasts – you’d have to say that’s a solid place for them to be.