In 2023, US technology stocks unexpectedly recovered from the "profit crisis" and "layoff wave" of 2022. The AI big model represented by GPT drove the frenzy of US stocks and triggered the stock prices of technology companies such as Nvidia to reach historic highs.
As of the closing of the last two weeks of 2023, seven technology companies, including Apple, Google, Microsoft, Amazon, Meta, Nvidia, and Tesla, have a total market value of over 12 trillion yuan, an increase of one-third from their market value as of June 30 this year. Meanwhile, the total weight of the seven tech giants in the S&P 500 index has reached a record high of around 30%, almost twice that of five years ago.
The market is eager to know if US technology stocks can continue to break records next year. Albert Edwards, global strategist at Societe Generale, pointed out that the instability of the US technology industry may become the biggest "black swan" in the economy next year.
In 2023, Nvidia reached a milestone in market value, breaking through $1 trillion for the first time on May 30th this year, becoming the first chip company in US stock market history to reach a market value of $1 trillion, creating history.
Since the beginning of this year, Nvidia's stock price has risen by more than 230%, making it the best performing stock among the seven major technology giants in the United States. What drives the company's stock price up is the chip computing power required behind the AI big model. The company is expected to exceed $30 billion in sales for the first time this year.
Next only to Nvidia in terms of stock price performance is Facebook's parent company Meta, whose stock price has risen by over 190% this year. The rise in Meta's stock price is also boosted by continuous investment in artificial intelligence, with the company's Llama AI big model directly benchmarking against OpenAI's GPT. Meta has also successfully found a new direction in the previous wave of layoffs.
Tesla, the electric vehicle company owned by tech tycoon Musk, has seen its stock price rise by over 100% this year. The market's investment in Tesla has also partially benefited from the company's progress in AI fields such as humanoid robots. At Tesla's shareholder meeting held in May this year, Musk announced that the humanoid robot "Optimus" being developed by Tesla will be able to run on Tesla's advanced assisted driving system software and computers in the future. He believes that most of Tesla's long-term value will ultimately come from Optimus.
Apple's stock price has also reached a milestone this year, with its first closing market value exceeding $3 trillion on June 30th. It is also the first company in the United States to exceed $3 trillion in market value and reached a historic high on July 31st. The company's stock price has risen by nearly 50% this year. In an uncertain economic environment, Apple stock investment is still seen as a "fortress" for investors.
As cloud service providers providing data center support for AI, Microsoft, Amazon, and Google have also benefited from the growth of data center business driven by AI demand this year. Amazon's stock price has risen by over 80% this year, while Google and Microsoft have also risen by around 60%.
As 2024 approaches, investors hope to know if the US technology industry can still become an engine driving economic growth next year. Faxing Bank holds a pessimistic attitude towards this.
Albert Edwards, a global strategist at Faxing, issued a warning in his final Global Strategy Weekly report released in 2023 about potential variables that could shake global financial markets in 2024.
In the report, Edwards focused on analyzing the instability of the US technology industry and its potential impact on the overall market. He warned that the biggest surprise in 2024 might be the bursting of the US technology foam, which could drag the entire US market into recession.
From the perspective of price to earnings ratio indicators, the valuations of these tech giants are still very high. According to data compiled by institutions, the expected price to earnings ratio of the Nasdaq index for the next 12 months is about 25 times. Although this is slightly lower than the historical peak of 30 times P/E ratio reached in 2020, it is much higher than the average P/E ratio of 19 times in the past 20 years.
However, Morgan Stanley and Faxing Bank hold different views. The securities firm stated that the US stock market may continue to rise next year as investors continue to increase their bets on technology companies. Morgan Stanley pointed out that the S&P 500 index has almost returned to the level of early 2022, and the "tech seven" may continue to rise in 2024 because these companies have performed very well in profitability and are expected to repurchase a large number of stocks next year. However, the institution's analysis suggests that the US stock market may experience a pullback before the end of next year.
Taking Apple Inc. as an example, an investor holding Apple Inc. stocks told a First Financial reporter, "Apple Inc. has a large cash flow, the iPhone is currently the world's highest profit margin mobile phone product, and Apple Inc. also has a strong shareholder return plan, all of which have made the company's stock price strong. I am still optimistic about the rise of US technology stocks next year."
Some market insiders also pointed out that the investment logic of "fear of missing opportunities" (FOMO) in the wave of AI big models has driven the rise of US stocks this year. With the tightening of regulation on AI big models, some investors may find it difficult to monetize them.