As the AI (Artificial Intelligence) craze continues to add momentum to US technology stocks, the "Big Seven" hit new highs.
On January 24th local time, Apple, Microsoft, Google, Amazon, Nvidia, Tesla, and Meta, known as the "seven giants" of the US stock market, drove the S&P 500 index back to historical highs. Except for a slight decline in the stock prices of Apple and Tesla, five of the "Big Seven" companies have seen their stock prices rise. During the trading session, the S&P 500 briefly hit a historic high of 4903.68 points before falling slightly to close at 4868.55 points, setting a new record high closing price. The Nasdaq 100 index also rose again, closing 0.55% higher, hitting a new closing high for five consecutive days.
On the 24th, Microsoft's market value exceeded $3 trillion at one point, becoming the first company after Apple to cross the $3 trillion threshold. It closed at $401.5 per share, up 0.92%, with a total market value of $2.99 trillion. The stock prices of Meta, Nvidia, and Google's parent company Alphabet also hit historic highs on the same day. Meta's market value has finally surpassed the $1 trillion mark since 2021, closing at $390.70 per share, up 1.43%; Nvidia closed at $613.62 per share, up 2.49%, and its total market value exceeded the $1.5 trillion mark, reaching $1.52 trillion; Alphabet's intraday stock price hit a historic high of $149.86, surpassing the closing high of $149.84 set in November 2021 and closing at $148.70 per share, up 1.1%.
The seven giants rank among the top nine companies with the highest market value in the world. Source: Companies Market Cap
In the past 2023, the seven major technology giants in the US stock market have driven the stock market to soar, contributing nearly two-thirds of the gains to the S&P 500 index. According to Wind data, the historical closing high of the index was 4796.56 points set in January 2022, with a intraday high of 4818.62 points.
AI Expands the Rising Space of Technology Stocks
The sustained enthusiasm of the market for AI has driven up the stock prices of the "Big Seven", especially for Microsoft. In 2022, with the launch of ChatGPT by the emerging AI giant OpenAI, a global AI craze was sparked. Microsoft, which valued the combination of generative AI technology and its products, and spent a lot of money to become OpenAI's largest shareholder and partner, began to make efforts. The company's stock price increased by over $1 trillion in 2023. Two weeks ago, on January 12th, Microsoft's stock price closed at $388.47 per share, up 1.0%, and its total market value briefly surpassed Apple's market value of $2.87 trillion at the time, becoming the world's highest company by market value.
According to statistics, in the past year, the combined market value of Microsoft, AI chip giant Nvidia, and Google's parent company Alphabet, which is actively investing in AI, has increased by $2.5 trillion. Due to its lack of outstanding performance in AI, Apple's stock price saw a relatively small increase last year, but also increased by nearly 50 percentage points.
The recent rise in Meta's stock price was also driven by CEO Zuckerberg's remarks last week. Last Thursday, Zuckerberg reiterated his emphasis on AI and announced that the company's next goal is to develop AGI (General Artificial Intelligence) and will purchase a large number of Nvidia AI chips for this purpose, obtaining approximately 350000 H100 GPUs from Nvidia by the end of this year.
Some institutions point out that if the subsequent development of AI can match the previous heat, technology stocks still have room for growth in the coming years. Jim Golan, co manager of William Blair, an investment bank in the United States, said, "People should be excited because when you look ahead to two, three, or even four years, AI has the potential to bring real change."
On January 3, Zhang Yidong, the global chief strategic analyst of Industrial Securities, the co president of the research institute, and the new wealth diamond analyst, said in the "Chief Connect" program of the surging news that this round of AI technology wave led by the United States may drive a new Jugular cycle in the United States and the world, similar to the Internet wave launched in the United States in the 1990s. The US technology market will bring investment opportunities in technology industries to global capital markets, including A-shares.
AI application layer company releases financial reports starting next week
In addition to a passion for investing in AI, financial reports are also a major factor contributing to stock prices. This week, the US stock market companies that have already released financial reports mainly come from the computing power side, such as chip manufacturing giants TSMC, SK Hynix, and Asma, which have performed well in their financial reports. Starting next week, Microsoft, Google, and Meta, which are in the AI application layer, will release their financial reports one after another, which may have a significant impact on the market.
Analysts at Bank of America had predicted that in the next two weeks, six of the "Big Seven" companies, except for Tesla, would report profit growth in their new fourth quarter financial reports. If it weren't for the support of these six companies, the fourth quarter earnings of the entire S&P 500 index would have declined year-on-year.
Previously, the return on investing heavily in AI had only just begun to show in Microsoft's financial results.
According to Microsoft's Q1 2024 financial performance released in October last year, generative AI contributed approximately 3% to the growth of Microsoft's cloud service Azure in the three months ending September 30, 2023.
On January 25th, Tesla released its fourth quarter financial report after the US stock market closed. The financial report shows that in the fourth quarter of 2023, the company's total revenue was 25.167 billion US dollars, a year-on-year increase of 3%, lower than analysts' expectations of 25.87 billion US dollars; The net profit attributable to common shareholders was 7.928 billion US dollars, an increase of 115% year-on-year; The net profit attributable to common shareholders under non GAAP accounting standards was $2.486 billion, a decrease of 39% year-on-year. Similar to previous quarters, although Tesla remained profitable in the fourth quarter, multiple financial indicators fell short of analyst expectations.