Posted January 27, 2023
By Ray Blanco
Tech Powers Higher as Growth Potential Excites Investors
It’s earnings week, and a few of the biggest tech companies on the street continue to push forward despite earnings misses.
This action is telling me that sentiment on technology stocks is shifting positively out in the markets.
That said, not all tech companies are reporting bad results. Outside of PCs, there is strong growth in the semiconductor space.
For example, the VanEck Semiconductor ETF (NASDAQ: SMH) isputting in a strong 18.6% gain year to date right now, handily outperforming the S&P 500 index’s 6.2% gain.
One factor at play is artificial intelligence.
I think investors are being wowed by evidence that AI is ready for prime time, and are looking ahead to the fortunes some of these companies will make selling interactive AI software and the hardware it needs to run on.
It’s what we saw with the media company Buzzfeed yesterday.
As I mentioned yesterday, the company announced it was going to lay off 12% of its workforce, but BZFD buzzed to an eye-watering 120% day’s gain on Thursday when CEO Jonah Peretti said he was going to use OpenAI to help the company generate content.
And it’s not just AI-generated content that is being integrated into big tech companies’ day-to-day…
AI is being integrated in various ways from using AI to improve products and services, increasing efficiency and productivity, and gaining a competitive edge in the marketplace.
One of the most common ways that big tech companies are using AI is through machine learning (ML).
ML is a type of AI that allows a computer to learn from data and make predictions or decisions without being explicitly programmed.
Companies like Google, Microsoft, and Amazon are using ML to improve their search algorithms, speech recognition, and image recognition capabilities.
Like the Buzzfeed example, we’re now starting to see companies use AI through natural language processing (NLP).
NLP is a type of AI that allows a computer to understand and generate human language, like ChatGPT.
Aside from generating the content, companies can use NLP to improve their chatbots and virtual assistants, making them more conversational and human-like.
Companies can also use AI to analyze data from various sources.
For example, companies like Amazon and Google may use AI to analyze customer data to gain insights into their behavior and preferences.
This allows them to personalize their products and services, which can lead to increased customer loyalty and sales.
And, of course, you have the automation that comes with AI system integration.
So looking a bit further ahead, I think the market will be willing to give tech companies having a tough 2023 some leeway—provided they have growth potential in this emerging space.