Artificial Intelligence Drives S&P 500 to New Heights

As the earnings season gains momentum, investors are eagerly awaiting the results of AI investments at S&P 500 companies. Analysts expect a slowdown in earnings growth, with corporate profits rising by 5.3% compared to the previous year. The technology and communication sectors, in particular, are expected to record significant increases, with projected earnings growth of 15.4% and 12.3%, respectively. Artificial intelligence has significantly contributed to market developments since last year, reflected by a 21% increase in the S&P 500 Index year-to-date. Howard Chan, CEO of Kurv Investment Management, emphasizes the critical importance of monetizing AI initiatives. Meta exemplifies this, with its stock price rising following expectations of strong revenue growth. In contrast, Google, with its substantial investments in AI technologies, raises questions about integration into existing business models. The S&P 500 is currently trading at 22.3 times the future 12-month earnings, above the long-term average of 15.7. Solita Marcelli of UBS Global Wealth Management expresses confidence that third-quarter results could further drive gains, especially as the semiconductor sector remains a key area for AI investments. Among the top-trending AI stocks, Broadcom ranks 8th. Cantor Fitzgerald recently raised the price target for Broadcom from $200 to $225, maintaining the "Overweight" rating ahead of the third-quarter results release. Broadcom, a provider of semiconductor and infrastructure software solutions, is considered a favorite in the AI sector, even though the fundamental environment has deteriorated in the past three months.