Pie Funds Founder and CIO Mike Taylor joins NZ Herald Business Editor at Large Liam Dann to talk the AI frenzy that is driving a new tech boom on Wall Street. Video / NZ Herald
A “frenzy” around the potential artificial intelligence reshape business is driving a new tech boom, says Pie Funds chief investment officer Mike Taylor.
“We are definitely back into a bull market for the Nasdaq,” Taylor told Market Watch.
“It’s quite phenomenal actually, what’s happened in the last couple of months,even in just in the last week, year to date, the Nasdaq is up 30 per cent after being after a terrible 2022 performance.”
“You compare that to the Dow and the S&P 500, which are sort of broader indices, they’re basically flat for the year.”
The new tech boom was essentially being fuelled by about five or six big companies, he said.
The likes of Meta and Google owner Alphabet are up by more than 100 per cent this year. Microchip company Nvidia’s value has soared almost 250 per cent in the year to date.
“It’s definitely an AI frenzy,” Taylor said.
“As investors, we’re trying to understand what the benefits of this new technology might be for companies in terms of their profitability and their operating margin. Because what we’re being told is that by implementing AI into your business, it could potentially reduce your worker headcount, improve your efficiency and improve your profitability.
“As investors, we’re scrambling to try and understand which companies are going to benefit from this the most.”
At the moment, that seemed to be the mega-cap tech stocks that were best placed to see immediate upside.
Picking which smaller companies and start-ups would make it through the pack was more difficult, he said.
Chip manufacturer Nvidia, for example, had an earnings call last week, where they mentioned AI 87 times, Taylor said, “and as a result, the stock was up 25 per cent”.
“It’s quite phenomenal.”
That meant its market cap soared by about US$184 billion ($304.8b) in one day to almost US$1 trillion.
Mike Taylor, founder and chief investment officer of Pie Funds. Photo / NZME
Meanwhile, as tech investors focused on the longer-term future the rest of the market was still struggling with concerns about inflation, high interest rates and the political theatre of the US debt-ceiling saga.
The political stand-off between the White House and Republican-controlled Congress over the need to raise the ceiling to avoid default has been rattling Wall Street for a few weeks.
An agreement was reached at the weekend but the deal still needs to get through Congress on Thursday morning, NZT.
“Undoubtedly there will be groups or factions within the Republican or Democrat party who won’t vote for it,” Taylor said.
“But it does seem likely that it will go through, and there was a bit of “risk-off” priced into markets in the lead-up to this that seems to have kind of been unwound.”
“Investors are relieved that we’ve got through this yet again,” he said. “ Ultimately, they just kick the can down the road with the debt ceiling though.”
- The Market Watch video show is produced in partnership with Pie Funds.
