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Reckoning on Big Tech’s AI Craze Comes Amid Earnings Reports
By Movieguide® Contributor
As seven big tech stocks—known as the Magnificent Seven—publish earnings reports this week, the companies must prove that their endeavors in rising AI technology are worth their increased stock values.
The Magnificent Seven includes Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia and Tesla, and most of these companies’ new tech focuses on AI.
“The Magnificent Seven are going to need robust earnings to explain their sky-high valuations,” explained Nigel Green of London-based deVere Group.
“The challenge now…is for companies at the forefront of this year’s AI hype to justify their elevated stock values with definitive forecasts that link the new technology to hard revenue gains and, ultimately, to improve earnings potential,” Economic Journalist Martin Baccardax said.
Baccardax added, “These seven stocks also make up nearly a third (around 31%) of assets under management in its Global Wealth and Investment Management division, a 44% increase since the start of the year.”
For example, Microsoft spearheaded “this year’s AI frenzy with its $30 billion backing of OpenAI, the company behind the ChatGPT chatbot.”
Google, Meta and Amazon have also developed their own AI technologies.
“We believe this is one of the most important earnings week for the tech sector in many years,” said Wedbush analyst Dan Ives. “With tech stocks showing a robust performance through the first half of 2023 now the Street needs to see what this AI Revolution holds for the tech sector heading into the rest of 2023 and 2024.”
Movieguide® Contributing Writer Dr. Michael Brown previously pointed out, “…in 2017 ‘…The size, scope, influence and power of the Big 5 tech companies; Google (Alphabet), Amazon, Facebook, Apple and Microsoft is jaw dropping. They have a combined valuation of over $3.3 trillion and make up more than 40% of the value of the Nasdaq 100 index!’”
With the addition of Tesla and Nvidia, the combined stocks’ valuation has increased by $8 trillion since 2017.
“The AI boom has boosted the ‘Magnificent 7′ stocks’ combined market cap to $11 trillion—that’s nearly triple Germany’s GDP,” Economic Reporter Zahra Tayeb said.
Morningstar’s Bryan Armour reported, “These seven companies (combining Alphabet’s share classes) top the Nasdaq-100 Index by weight, and now represent nearly 55% of the index.”
Movieguide® previously reported on the impact AI could have on society:
OpenAI, the company behind ChatGPT, recently announced the next-generation version of artificial intelligence technology, GPT-4, and the update reveals the power AI could have on society.
While GPT-4 is currently available only via a waitlist, some early-access users have shared their findings about the tool’s capabilities…
However, while the AI tool provides some benefits, users may wonder what risks are involved.
For example, it could enable students to cheat.
OpenAI reports that GPT-4 exhibits “human-level performance” on various professional and academic tests, revealing that the updated AI system passed a simulated law school bar exam with a score around the top 10% of test takers.
As AI becomes more prevalent, users should be aware of its potential dangers.
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