Why AI Is Fueling The Current Stock Market Rally

The artificial intelligence (AI) theme has been propelling the US stock market higher this year. The general opinion among analysts is that AI will boost earnings and boost stock values. This will be accomplished through lower staffing levels, increased decision-making efficiencies, enhanced security, and a more personalized customer experience.

 

The S&P 500 is up 19% this year, and the Nasdaq 100 is up 35%, thanks to recent advances in generative artificial intelligence (AI), a technology that employs basic cues to create content and automate numerous business operations. The ramifications for corporate profits have whipped Wall Street into a frenzy as generative AI promised a step-function rise in labor productivity.

 

Cathie Wood's Ark Investment Management authored one of the most bullish estimates, suggesting the technology could add $14 trillion to the economy by the decade's end. Top economist Ed Yardeni of Yardeni Research goes further. He believes we're in for a period of economic and stock market growth not seen in nearly 100 years.

 

Big tech businesses have gone to considerable efforts in recent months to ensure that they are talking about artificial intelligence as often as possible, making product launches, constructing infrastructure, and establishing alliances.

 

Microsoft and Google executives said the word AI or a version of it 145 times during this quarter’s earnings calls.

 

Even discounting the shorter-term reaction to quarterly earnings, AI helps explain the broader spike in their shares thus far in 2023. Despite the dip this week, Microsoft has gained 38% this year. Google has increased by 47%, whereas Meta has more than doubled and Nvidia's stock has skyrocketed 214% higher in 2023.

 

Investing in an AI ETF can provide exposure to a wide range of AI-related companies, which may offer growth and diversification opportunities. However, before investing in an AI ETF or any other investment, you should conduct your own research and carefully examine your investment objectives, risk tolerance, and financial condition.

 

There are multiple AI ETFs on the market, each with a unique investment strategy and holdings. Some of the most popular AI ETFs include the following.

 

  • Global X Robotics & Artificial Intelligence ETF (BOTZ)

 

  • iShares Robotics and Artificial Intelligence ETF (IRBO)

 

  • First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)

 

  • AI Powered Equity ETF (AIEQ)

 

  • WisdomTree Artificial Intelligence ETF (AIQ)

 

 

 

 

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