The American tech giants have been doing very well for a long time, despite some turbulence at the end of the summer. For example, Nvidia's stock price has risen by almost 200 percent so far this year. The question is now whether the expectations on the companies are unrealistic.
These companies are profit machines. In a slightly longer perspective, we have seen a strong upswing for the companies on the stock exchange. It's clear that the expectations will also be very high, says Frida Bratt.
At the same time, there are indications of slower growth ahead. Apple, Nvidia, Microsoft, Alphabet, and Amazon make up the five largest companies in the S&P 500, a stock index of the largest listed companies in the US. The five are expected, according to data from Bloomberg Intelligence, to report an average profit growth of 19 percent in the third quarter. That would be their slowest collective growth in six quarters.
"AI-hype"
According to Frida Bratt, it is the costs of the enormous AI investments that have been made that are haunting and creating uncertainty ahead.
AI has driven the entire group of companies. The question is how much the investments have cost and when the return on investment will come. It's not a given that there will be cheers on the stock exchange now, says Frida Bratt.
Even if the technology is there and is real, the question is when the profitability will be seen. In the worst case, it could happen that the "AI-hype" that has driven the stock prices begins to be questioned.
Small investors affected
These companies are so enormous and if they start to shake, it will affect the stock market sentiment as a whole. Swedish small investors risk being affected since tech companies make up a very large part of US funds, tech funds, and global funds that are popular on the market.
What do small investors need to think about going forward?
These companies have done very well, and now there is some uncertainty. Then it's good to review what exposure you have and avoid "doubling up". You might not want to have both a global fund, a US fund, and a tech fund at the same time, says Frida Bratt.
Seven companies in the technology sector go by the nickname "The magnificent seven".
The companies are: Alphabet (Google), Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.
Tesla reported its quarterly report on Wednesday. For the other companies, the following dates apply:
Tuesday 29/10: Alphabet/Google
Wednesday 30/10: Meta/Facebook, Microsoft
Thursday 31/10: Apple, Amazon
Wednesday 20/11: Nvidia
