MarketWatch: “$200 Billion in One Day… Incredible” – Mike Taylor on AI Frenzy Fueling New Tech Boom

Mike Taylor, chief investment officer at Pie Funds, said the “frenzy” around potential artificial intelligence reinventing business is sparking a new tech boom.

Taylor: Nasdaq is definitely back in a bull market
told Market Watch.

“It’s actually pretty amazing. In the last few months, just last week, year-to-date, the Nasdaq is up 30 percent after a dismal performance in 2022.”

“When you compare this to the broader indices, the Dow and the S&P 500, they are essentially flat throughout the year.”

The new tech boom was basically driven by about five or six big companies, he said.

Meta and Google owner Alphabet are up more than 100% this year. The value of microchip company Nvidia has soared nearly 250 percent year-to-date.

“This is definitely an AI frenzy,” said Taylor.

“As investors, we are trying to understand how this new technology will benefit companies in terms of profitability and operating margins. The introduction of AI to the business has the potential to reduce headcount, improve efficiency, and improve profitability.

“As investors, we are working hard to understand which companies are most likely to benefit from this.”

At this point, it looks like mega-cap tech stocks are the ones with the immediate upside potential.

Picking which small businesses and start-ups will survive is even harder, he said.

Chip maker Nvidia, for example, mentioned AI 87 times on its earnings call last week, and “as a result, its stock price rose 25%,” Taylor said.

“It’s pretty amazing.”

This means the company’s market capitalization has surged by about US$184 billion ($304.8 billion) in a single day to almost US$1 trillion.

Meanwhile, while tech investors focused on the long-term future, the rest of the market was still plagued by concerns over inflation, high interest rates and the political climate surrounding the US debt ceiling.

A political battle between the White House and the Republican-controlled Congress over the need to raise the limit to avoid a default has rocked Wall Street in recent weeks.

A deal was reached over the weekend, but the NZT said the deal would need to be passed by parliament on Thursday morning.

“There are definitely groups and factions within the Republicans and Democrats who don’t vote for it,” Taylor said.

“However, it seems likely that it will pass. ”

“Investors are relieved to have gotten through this again,” he said. “At the end of the day, they’re just ignoring the debt ceiling and paving the way.”

– The Market Watch video show is produced in partnership with Pie Funds.