From top to bottom, more money is spent on artificial intelligence (AI) while less is being spent on almost everything else. At a stock market level, the companies that can benefit from AI are increasing in value while the rest are by and large stagnant. At the company level, costs are being saved across businesses so cash can be funnelled into more AI spending. The consensus expectation is that it will change the world, and recent earnings results show how much money across the entire supply chain is behind that conviction.
The S&P 500 is up 20 per cent this year. However, this growth has been driven almost entirely by Apple (US:APPL), Microsoft (US:MSFT), Nvidia (US:NVDA), Tesla (US:TSLA), Meta (US:META), Alphabet (US:GOOGL) and Amazon (US:AMZN), all of which, to some degree have a growth story around AI. If we ignore these giants, the index would be up just 2 per cent. Apple, the only company in the group that has not invested heavily in Nvidia’s graphics processing units (GPUs), is the slowest riser of the seven.
