Variety of AI Investments: A Look at the Winners of the S&P 500

The current report on the earnings season draws investors' attention to the results of AI investments within S&P 500 companies. Analysts expect that the growth of corporate earnings might slow down. According to a Reuters report, the increase in S&P 500 earnings is anticipated to be only 5.3% compared to the previous year, compared with a 13.2% increase in the second quarter. Strong growth is expected particularly in the technology and communication services sectors, with technology stocks projected to rise by 15.4% and communication services by 12.3%. The dominance of AI companies has shaped the narratives of the earnings season since last year, leading to significant market gains. The S&P 500 is currently at a record level, having risen by about 21% this year, driven by strong performances particularly in the technology and communications sectors. Howard Chan, CEO of Kurv Investment Management, notes that analysts are particularly focused on the monetization of AI initiatives by major companies. Meta is an example, with its stock price rising following forecasts of strong revenue growth, indicating that investments in AI are effectively funded by income from digital advertising. In contrast, Google's high expenditures on AI technologies raise questions about their integration into existing business models. Currently, the S&P 500 is being traded at 22.3 times the future 12-month earnings estimates, which is above the long-term average of 15.7. Many investors hope that the results of this quarter will justify the increased stock valuations. Solita Marcelli of UBS Global Wealth Management is optimistic that the upcoming third-quarter results could trigger further gains, especially in the semiconductor sector, which is a focal point of AI investments.