Equities Outlook – AI powered frenzy could boost US tech industry

Last week, the Fed’s interest rate decision alongside the hawkish comments from Fed Chair Powell failed to impede the ascent of US stock market indices, with Dow Jones 30 being the notable exception, closing the week marginally lower, as traders opted for the risk on approach. Despite the calls for more rate hikes to contain past-peak inflation, market participants stuck with their guns and chose to fight the central bank’s narrative, foreshadowing a pivot in March and rate cuts in the second half of the year. In this report we aim to present the recent fundamental and economic news releases that impacted the US stock markets, look ahead at the upcoming events that could affect their performance and conclude with a technical analysis.

Google set to counter Microsoft’s lofty AI plans

Last month, Microsoft (#MSFT) made headlines when it announced its multiyear, multibillion-dollar collaboration with Open AI, infamous for its ChatGPT tool and unveiled its plans to integrate it into its cloud services solutions for optimization, kickstarting an AI arms race with its competitors. Earlier this week Microsoft’s CEO stated that the software giant is close to adding an updated, and faster version of ChatGPT into its own Bing search engine within a few weeks. The head start didn’t last long however, as on Monday, Google (#GOOG) announced that it is launching an AI chatbot named “Bard”, in attempts to stay relevant and compete with Microsoft, as a new AI-infused tech era has begun.  Alphabet’s CEO, Sundar Pichai, elaborated further in a blog post that “Bard seeks to combine the breadth of the world’s knowledge with the power, intelligence and creativity of our large language models” adding that, “draws on information from the web to provide fresh, high-quality responses”. Furthermore, Pichai noted that Bard would be powered by Language Model for Dialogue Applications, LaMDA in short, which gained notoriety last year as a former Google engineer claimed it was sentient, a claim that was later dismissed by the company. Moreover, Google has reportedly invested funds equal to $300m in AI start-up Anthropic, that developed a chatbot known as “Claude”, having similar capabilities as Open AI’s ChatGPT. In other news, Baidu (#BIDU) the Chinese search engine giant saw its share price spike up by more than 15% yesterday, lifted by a report stating that the company has successfully tested its own generative artificial intelligence tool called “Ernie Bot” and will be launched in March. Also, C3AI recently announced a new artificial intelligence focused product suite, known as C3 Generative AI Product Suite, that integrates other AI systems, including Open AI’s ChatGPT.  Apple’s (#AAPL) CEO Tim Cook also noted that AI is a major focus for the company, seeing “enormous potential” for impact into all aspects of the company’s procedures. Needless to say, the push for integrating state-of-the-art AI powered solutions into already existing successful services from tech giants, has nudged analysts to scramble back to their drawing boards, as an AI-fueled frenzy could transform the tech industry as a whole. According to Cathy Wood’s “Big Ideas 2023” report, the Ark Invest founder underscored the importance that artificial intelligence could yield in the coming years, forecasting that the market value of disruptive innovation platforms could rise from $13 trillion today to $200 trillion by 2030.

技术分析

#US100Cash 4-Hour Chart

Looking at #US100Cash 4-hour chart we observe the index extending its upward trajectory over the past week, breaking past the previous resistance levels and rising to fresh 5-month highs. We maintain our bullish outlook bias for the index given the ascending trendline incepted since 6    of January and supporting our case is the RSI indicator below our 4-hour chart which registers a value of 64, showcasing bullish sentiment in favour of the index. The flirting of the price action with the upper bound of the Bollinger Band could also serve as another indication that the bulls are eager to drive prices. Should the bulls reign over, we may see the break above the 12900 (R1) resistance level and a move closer to 13250 (R2) resistance barrier. Should on the other hand the bears take over, we may see the break below the 12400 (S1) support level and a move close to the 12000 (S2) support base.

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