Investors Are Happy to Pay Premium for Tech, But Not for AI
Investors on Wall Street and beyond are betting that the great tech rally of 2023 has staying power, even as they appear skeptical that the artificial-intelligence era will live up to the hype.
Some 77% of the 514 respondents to the latest Markets Live Pulse survey are planning to either increase their exposure to technology stocks or keep it steady over the next six months. Meanwhile, less than 10% see a bubble in the sector bursting anytime soon. That bullishness has pushed the Nasdaq 100 to its best first half in history, ramping up market valuations and blindsiding pros on the Street.
Yet while survey participants are likely riding the AI-fueled market melt-up thanks to their broad equity exposure, they aren't going all-in on the technology just yet. Half are disinclined to pay out of their own pocket for AI tools to aid their personal or business life, while a majority of firms aren't planning on using them for trading or investing ahead.
All that underscores the challenge for companies to generate profits anytime soon from their big investments in the era of OpenAI Inc.'s ChatGPT.
“Right now, the near-term hype is over its skis,” said Ted Mortonson, a technology strategist at Robert W. Baird & Co.
The Nasdaq 100 has soared more than 40% year-to-date, led by the likes of Apple Inc. and Microsoft Corp., as demand for futuristic tech booms. The benchmark now trades at about 25 times estimated earnings, above its 10-year average of almost 21. And senior corporate executives are talking more about AI this earnings season and less about an oncoming recession.
Unlike during the dot-com bubble of the 2000s, AI isn't entirely based on speculation, given the slew of practical applications that are already in the works, albeit in
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