ChatGPT revolution has driven half of stock market rally this year: JPMorgan
Published: 25 April 2023 at 04.13 ET
Interest sparked by artificial intelligence powered by ChatGPT and other major language models has driven more than half of the gains in the S&P 500 this year, according to an analysis by JPMorgan.
The analysis finds that interest in the topic has led to a market value of $1.4 trillion and a gain of 45% so far this year.
The analysis includes…
Interest sparked by artificial intelligence powered by ChatGPT and other major language models has driven more than half of the gains in the S&P 500 this year, according to an analysis by JPMorgan.
The analysis finds that interest in the topic has led to a market value of $1[ads1].4 trillion and a gain of 45% so far this year.
The analysis includes Microsoft
MSFT
,
Google parenting alphabet
GOOGLE
,
Amazon.com
AMZN
,
Meta platforms
META
,
Nvidia
NVDA
and Salesforce.com
CRM
in what it calls “LLM innovation” stocks, and that grouping outperforms the other largest five stocks — Apple
AAPL
,
Tesla
TSLA
,
Berkshire Hathaway
BRK.B
,
UnitedHealth Group
UNH
and JPMorgan Chase
JPM
– as well as constituents 11 through 50 of the S&P 500 and Russell 2000
ROUTE
.
Both Alphabet and Microsoft will report after the close on Tuesday.
Related: For Microsoft, AI is the future, but the present is cloudy
This AI grouping explains 53% of the S&P 500
SPX
performance, 54% of the Nasdaq 100
QQQ
performance and 68% of growth factor gains.
The JPMorgan team led by Dubravko Lakos-Bujas does not see this development positively.
The analysts say the AI gains, plus a rotation to safety, have resulted in the narrowest stock lead in an up market since the 1990s. “Defensive rotation and narrowing growth leadership are typically indicative of a slowing cycle/recession,” the analysts say.
They say stocks 11 through 50 in the S&P 500 have greater valuation support, and trade notably cheaper than the 10 largest megacaps. They see further room for rotation into defensives such as healthcare, utilities and consumer goods.
