Big Tech’s Ability to Deliver on AI Profits Looms Over S&P 500
- Top seven stocks in S&P 500 produced most of 2023’s gains
- Pressure is mounting to deliver on promise of AI earnings
A Nvidia Grace CPU Superchip, left, and Grace-Grace module at the company's headquarters in Santa Clara, California.
Photographer: Marlena Sloss/BloombergThis article is for subscribers only.
The fate of the S&P 500 is increasingly resting on whether a handful of the biggest technology companies can parlay artificial intelligence investments into even higher profits.
Seven firms including Microsoft Corp. and Nvidia Corp. have driven about three-quarters of the index’s gain this year, in a rally stoked by an investor obsession with AI’s potential to disrupt vast parts of the economy. Valuations are high, with the companies’ shares trading at an average of about 32 times earnings. Pressure is mounting on companies to deliver on some of the earnings hope embedded in their ever-rising stock prices.