ChatGPT Revolution Has Driven Half the Gains in S&P 500. Could the Rally Keep Running?

To the Moo wrote a column · Apr 27, 2023 03:08

The interest sparked in artificial intelligence driven by ChatGPT and other large language models has led to a market cap creation of $1.4 trillion and driven more than half the gains in the S&P 500 this year, according toan analysis from JPMorgan.

The analysis includes $Microsoft (MSFT.US)$, $Alphabet-A (GOOGL.US)$, $Amazon (AMZN.US)$, $Meta Platforms (META.US)$, $NVIDIA (NVDA.US)$ and $Salesforce (CRM.US)$ in what it calls "LLM-innovation" stocks, and that grouping outperforms the other largest five stocks -- $Apple (AAPL.US)$, $Tesla (TSLA.US)$, $Berkshire Hathaway-B (BRK.B.US)$, and $UnitedHealth (UNH.US)$ -- as well as constituents 11 to 50 in the S&P 500, and the Russell 2000.

ChatGPT Revolution Has Driven Half the Gains in S&P 500. Could the Rally Keep Running?

With quarterly reporting season just under way, the term "AI" has been used nearly twice as frequently in the conference calls of S&P 500 companies as it was in the previous quarter, a Reuters analysis showed.

Both companies said AI is already juicing sales but neither said when or if they will start breaking out any sales, costs or profits from the technology.

The JPMorgan team led by Dubravko Lakos-Bujas does not view this development positively.

The analysts say that the AI gains, plus a rotation into safety, has resulted in the narrowest stock leadership in an up market since the 1990s. "Defensive rotation and narrowing growth leadership is typically indicative of a slowing cycle or recession," the analysts say.

Mooers, do you think the AI-driven rally could keep running?

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Talented Mr Ripley : IMO, if everyone keeps following the advice, suggestion, instruction, direction, etc., from a single source, that being AI, well of course the bullish/bearish market will continue. the market fluctuates because there isn't a consensus of investor sentiment/activity. If everyone keeps buying/selling a particular stock until 'Simon says' then the increase/decrease will continue indefinitely until human greed and/or satisfaction overcomes AI.

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