Controversy Over Bubble in US Tech Stocks Soaring Amid AI Boom... Which Companies Are Profitable?

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There are growing concerns that the surge in U.S. tech stocks driven by last year's generative artificial intelligence (AI) boom may have created a bubble.

The Wall Street Journal (WSJ) reported on the 2nd (local time), "One thing that must become clear in 2024 is that AI can start to prove it can generate money," adding, "Whether this is possible is an entirely different question."

Last year, the U.S. stock market rallied, fueled by the AI craze sparked by OpenAI's ChatGPT. This rally overcame negative factors such as economic recession and interest rate hikes. Centered around the 'Magnificent 7' stocks invested in AI, the Nasdaq index rose 43% last year, marking its largest increase since 2003 (50%). However, on the first trading day of 2024, major tech stocks collectively showed weakness, prompting evaluations that a more sober perspective on AI is needed. On that day, the Nasdaq Composite Index, which is tech-heavy, closed at 14,765.94, down 1.63% from the previous session.

Microsoft, which actively integrated ChatGPT features into its products like Word and Bing, saw its stock price rise 57% last year alone. However, there are concerns that the excessive valuation of AI may have been priced in already. WSJ noted, "Microsoft is already running a large-scale business generating over $218 billion in annual revenue," and "AI will need to drive significant new growth to advance this." It also stated, "Many of Microsoft's corporate clients are figuring out how to utilize AI technology, which could mean limited investment activity in the short term from the company's perspective."

WSJ added, "Except for Nvidia, there are few companies making substantial profits through AI." Even during last year's heated enthusiasm for generative AI, many IT companies faced layoffs and restructuring due to slowing business growth.

Adobe's stock surged 85% ahead of its Q4 earnings announcement last year on expectations of increased demand for its AI-powered image generation service, Firefly. However, the stock plunged 6% after the earnings report due to disappointing sales below Wall Street expectations. WSJ warned, "Similar cases may occur among several IT companies releasing Q4 reports starting later this month."

WSJ stated, "It may take considerable time to prove that chatbots are not just about talking." Patrick Colville, a software analyst at Scotiabank Capital, pointed out, "The benefits of AI may materialize later than many people expect."

This content was produced with the assistance of AI translation services.