AI stock hype isn’t yet a bubble, and little investment from retail investors means there’s room for more upside

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  • The hype around artificial intelligence is real, but has yet to bubble up in stocks related to the sector, according to DataTrek.

  • The research firm said retail investors have yet to invest in AI stocks and fuel a bubble frenzy like they have during the pandemic.

  • “Interest in ‘tech stocks’ is a far cry from the levels seen during the pandemic-era speculative tech bubble,” DataTrek said.

According to DataTrek Research, the AI ​​hype is real, but it has yet to trickle down to the stock market despite year-to-date rallies in mega-cap tech stocks like Microsoft, Alphabet and Nvidia.

Indeed, retail investors have yet to invest in the space as they are still licking their wounds from the 2022 stock market meltdown, and that could ultimately mean there is more potential left in these stocks as investors return to the market.

DataTrek’s research in a Wednesday note is based on various Google Trend Search queries, which show that the keyword “ChatGPT” far exceeds search interest in bitcoin, while the keyword “tech stocks” continues to decline from its peak in February 2021, when it was high. -Flying speculative tech stocks have finally peaked.

“Interest in ‘tech stocks’ is a far cry from the levels seen during the pandemic-era speculative tech bubble,” said DataTrek Research co-founder Jessica Rabe. “Although there have been bursts of attention after the February 2021 peak, they continue to decline.”

According to Rabe, this means that institutional investors have likely been driving the recent rise in AI-related tech stocks, which means there’s still plenty of upside potential if retail investors get more involved. space.

“For those worried about another tech bubble, this [Google Trends search] graph shows it’s a long way off,” Rabe said.

And this time around, there’s more meat on the bone for artificial intelligence given its massive implications for all aspects of business than there was for recent trending hype. technologies surrounding the metaverse, cryptocurrencies and Web 3.0.

“ChatGPT has much broader applications, so its appeal is more permanent, whereas the general focus on bitcoin is strongly correlated to price,” Rabe explained.

“It remains to be seen how generative AI will affect both business profitability and productivity, or widen and narrow competitive moats, but generation AI targets the largest total addressable market from the smartphone,” said Rabe.

In other words, they’re hyping up the AI ​​hype, given how transformative recent tech launches of OpenAI and Alphabet have been.

Finally, Google Trend Search data for individual stock symbols such as MSFT, GOOG, and NVDA have risen since the start of the year, but are still well below their early 2022 highs.

“As with ‘tech stocks’, the focus is far from historic highs. In other words, not enough retail investors have been sucked into these Big Tech stocks to indicate a bubble,” said Rabe. “On the plus side, there’s not enough interest to indicate a bubble is forming, and there’s a lot more room for retail investors to get involved in these names.”

Read the original article on Business Insider

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