Coming in… softly?
As we entered 2023, there was a lot for markets to be nervous about: inflation was running hot, the corporate world was still adjusting to what post-Covid work looked like, and economists were rolling out their favorite words — “it depends” — when asked whether the Federal Reserve’s interest rate hikes would send the economy into a recession.
But the latest data seems to suggest that Jay Powell and co. might have pulled it off — indicating at the Fed’s final monetary policy meeting that they are more likely to be cutting interest rates than hiking them next year. Indeed, the recession that so many expected to come… hasn’t shown up.
Say no more
The slightest mention of rate cuts has been enough to send traders into a buying frenzy, with US stocks up 14% since the end of October, taking the total gains for the S&P 500 Index to a whopping +25% on the year. A substantial portion of that rally was because big tech was feeling much more like the 2020/21 version of itself, as some of the biggest tech stocks posted massive year-to-date gains (Alphabet+53%, Apple+57%, Amazon+79%, Tesla+138%) — but none more so than Nvidia, which had one of the best years in corporate history.
AI’s arrival
Nvidia CEO Jensen Huang this year revealed that back in 2018 the tech giant had a watershed moment, deciding — in his words — to “bet the company”, doubling down on building innovative graphics processing units (GPUs) that would become the building blocks for some of the most disruptive software ever built: generative artificial intelligence. The reward for that bold vision? Soaring GPU sales and a stock price that’s up 247% this year — taking Nvidia into the rarefied air of the $1 trillion market cap club.
Although ChatGPT was launched at the end of 2022, 2023 was undoubtedly the year that AI tools burst into the real mainstream, with students, creative artists, accountants, lawyers, coders, major enterprises, and even criminals finding ways to use the burgeoning set of tools.
The chatbot soared to a million users in just 5 days, hitting the 100 million user milestone a mere 2 months after its launch. For perspective, Instagram took 15x as long to reach that benchmark, and Spotify took around 4-and-a-half years. Ignoring Meta's Threads, which leveraged its Instagram user base, no product has ever grown at such a rapid pace. Throw in a little boardroom drama, plus a few doomsday “end of the world” quotes about AI, and you’ve had quite the year.
