The magnificent seven technology stocks or Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla have ridden high on the current artificial intelligence, AI boom and their market capitalization are all at circa or above 1 trillion USD.
Year to date 2024 the magnificent 7 stocks have sagged on a partial reset of the expectations that the Federal Reserve will target lower interest rate levels in 2024. Artificial intelligence, AI as any emerging technology sector is very innovation driven and requires huge amounts of capital, which only interest rate sensitive venture capital funds can provide. Interest rates sensitive, because venture capital funds provide an alternative to US treasuries, be it a minor one. Venture capital funds and the artificial intelligence, AI startups they finance are very sensitive to higher interest rates, because they deprive them of cheaper way of financing their business and lesser risk-reward ratio in comparison with utilities, commodities, industrial stocks and US treasury bonds.
The magnificent seven technology stocks or Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla are all overvalued by 30 %, 50 %, 11%, 20 %, 14%, 42 % and 84 %, according to Wolfteam Ltd.
In the long run, if artificial intelligence proves to be the "new internet" the magnificent seven technology stocks or Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla may well prove undervalued, but Wolfteam Ltd.'s house view is that it is doubtful that artificial intelligence, AI will prove as powerful as the internet. Artificial intelligence, AI is just an application of the data gathered from the internet and offline.
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