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AI boom on Nasdaq. Index with this year's new highs

created Daniel Kostecki17 May 2023

The Nasdaq 100 hits new highs in 2023, approaching 13500 as Google and Amazon join the tech and AI rally.

The Nasdaq 100 Index is up 22,6% since the beginning of the year, the largest rally among the world's major indices. Interestingly, the technology stock index is being chased by the Japanese Nikkei, which has been up 17,7% since the beginning of the year.

While some of the largest companies such as Microsoft Corp., Nvidia Corp. and Apple Inc. taking a breather, although MSFT continues to climb after big gains in previous weeks, other heavily weighted components, including Alphabet Inc. and Amazon Inc. have caught up.

GUIDE: How to invest in artificial intelligence (AI)?

Advertising as a revenue driver for Alphabet and Google

Alphabet's stock jumped after AI news from Google's I/O 2023 developer conference. The company has assured investors that advertising will remain its revenue engine even as the company responds to the challenges posed by OpenAI's ChatGPT product.

In turn, OpenAI has already concluded a deal with Microsoft, which has reportedly invested as much as $13 billion in the startup. However, Microsoft is not just a financing company; the agreement allows Microsoft to use the technology to improve its products and services, including search.

Microsoft shares are up 19% in the last three months and 30% since the start of the year, largely as part of widespread enthusiasm for tech-driven AI initiatives.

Investors are waiting for new news

During the May 23 Marketing Live event, Google plans to provide more details on its advertising strategy as it addresses the growing role of generative AI.

Investors waited until Google will directly address the issue of AI search, and they were obviously pleased with what they heard. Alphabet shares are up 7% over the past week. Trading volume was 47% higher than average. The increase in the share price since the beginning of the year is 35%.

While Google offers links to find your own answers to your search questions, Chat GPT provides direct answers to questions. While it is true that the accuracy of ChatGPT can certainly be improved, this is part of Microsoft's investment.

ChatGPT fault?

In addition, ChatGPT threatens existing business models in a way that Google does not, as evidenced by the educational company Chegg Inc. blaming the generative AI tool for the decline in sales and profits.

Google had previously changed its search algorithms, which resulted in a loss of visibility for many companies, but now it has found itself in the crosshairs of changes it did not initiate.

In a May 10 blog post, "Search Ads Today and in the Future" Vidhya Srinivasan, vice president and general manager of the Google Ads group, developed experiments in Google's search labs called the Search Generative Experience.

Dedicated places for advertisements

"With SGE, search ads will continue to appear in dedicated ad spaces across the page" the company said. “In this new experience, advertisers will still have the opportunity to reach potential customers during their search journey. We will test and develop the way ads are served as we learn more."

Perhaps to appease the company's large advertiser base, it added: "In addition, SGE, like other search experiences, is designed to highlight and draw attention to web content."

Concerns about AWS

Amazon was also the driving force behind Nasdaq 100 performance this week. While there has been no concrete news from Amazon, the stock has rallied with Alphabet and the wider Nasdaq 100 in recent days. The AWS service owner is trying to demonstrate its ability to drive customer AI initiatives. Share price Amazon week by 3%, month by 10% and YTD by 35%.