As more and more industries adopt artificial intelligence technology, AI companies are enjoying a euphoric rally, reports an article in Bloomberg. And while there unquestionably opportunity to be found in the sector, investors should do their due diligence before buying, warns Michael O’Rourke of Jonestrading. “We’ve had tons of episodes…where a group becomes hot and everyone just piles into everything related to it,” O’Rourke told Bloomberg, adding “If you’re speculating, you’re not investing.”
In the wake of the release of OpenAI’s ChatGPT tool, AI has become a buzzword on Wall Street, as more avenues for the technology’s usage are explored. Microsoft is pouring $10 billion into OpenAI, with plans to utilize their models in Microsoft products. And many analysts are touting Nvidia Corp. as a top company to watch for its graphics chips. Nvidia shares skyrocketed 34% last month, its best performance in six years. Other companies that are either already using AI or announced plans to do so also rallied in January: BigBear.ai Holdings Inc surged fivefold, Buzzfeed soared over 300%, and software maker C3.ai Inc. jumped 77%. O’Rourke told Bloomberg that he expects to see more companies enter the AI fray in order to capitalize on the trend.
Meanwhile, the tech rally has pushed the Nasdaq 100 Index up 11% so far in 2023, and over its 200-day moving average, stretching into the longest streak above the average in roughly 20 years. In other tech news, Intel Corp. is slashing management pay in the wake of a decline in revenue and earnings, while Snap Inc. is also predicting a quarterly revenue drop, its first ever. But Advanced Micro Devices, which is the second-biggest maker of computer processors, has a more positive forecast for their first quarter than previously expected. Western Digital Corp is also getting a $900 million shot in the arm by Apollo Global Management at a strategic time after a disappointing revenue forecast. And OpenAI, riding high on its ChatGPT success, announced a new tool that will help determine if text that’s been passed off as human was actually written by AI, Bloomberg reports.
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