With investors pouring billions into AI-focused projects, the stocks of many of these companies have soared to new highs, adding around $150 billion to the net worth of the wealthiest individuals.
Over the past few months, AI has contributed immensely to the earnings of Meta, Nvidia, Microsoft, and Alphabet, amongst others. As a result, these companies profits have helped the already wealthy become even richer.
Meta’s AI investment and cost cutting measures added around $57 billion to the net worth of its founder, Mark Zuckerberg. The tech giant has been vocal about its ambitions in the space and is looking to build AI into its products.
AI technology has also helped Oracle founder Larry Ellison surpass Bill Gates on the world’s wealthiest people list.
The biggest beneficiary appears to be Nvidia founder Jensen Huang. Thanks to increased demand for high-end processors his company recently became a trillion-dollar firm. Nvidia stock is up 199% on the year-to-date metric, adding about $24 billion to Huang’s wealth in 2023 alone.
AI-related companies drive Nasdaq index growth
The investment in AI has driven growth in the value of the Nasdaq index. However, the investments in Nasdaq stocks have benefited only a few big tech companies: Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia.
Due to the AI-driven bull run, the seven companies have seen their value rise by $3.35 trillion this year. However, the remaining 93 stocks on the Nasdaq 100 only increased by $635 billion. This means the seven stocks now account for about 84% of the index’s $4 trillion growth in 2023.
AI’s growing interest continues to attract investors
Since Microsoft announced its investment in ChatGPT’s OpenAI, investors have been quick to seek opportunities within the industry. Some financiers, like Bill Ackman and Stanley Druckenmiller, have made significant investments in artificial intelligence.
Ackman has already invested over $1 billion in Microsoft, and hedge fund billionaire Chase Coleman has urged investors to buy AI stocks. In the same vein, Druckenmiller has placed $220 million into Nvidia and added $210 million to his Microsoft holdings.
Retailers pile in
Though a significant proportion of the capital flooding into AI stocks has come from billionaires, the bullish run has also attracted the attention of retail investors. After missing out on the AI-driven rally earlier this year, ordinary investors are increasing their exposure to tech stocks.
While quoting VandaTrack, FT noted that retail investors’ net purchase of U.S. stocks hit almost $1.5 billion on May 30 and 31. Being the highest daily figure in three months, a significant aspect of that purchase can be credited to tech stocks.
Meanwhile, investments in AI go beyond the stocks themselves. AI-focused startups have received billions in investments too. Pitchbook reported that the value of announced deals for generative AI in 2023 Q1 was $10.68 billion. US AI-related startups have raised $25 billion in funding this year.
Perhaps the best sign of the investment frenzy in AI is four weeks old startup Mistral AI raising $113 million.
and then