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AI Stocks: Interest Rates Won’t Change the Fundamental Landscape for Tech, Analyst Says
The growth of generative AI has significantly impacted the chip stocks and the broader technology sector, with companies like AMD, Intel, and Nvidia experiencing significant growth.
Despite the current macroeconomic environment with higher interest rates, the thesis of AI’s potential to shift the way technology works remains strong. In this article, we will discuss the views of Matt Bryson, a Red Bush Enterprise Hardware analyst, on the impact of interest rates on the AI trade and the future of AI stocks.
The Impact of AI on Chip Stocks:
Over the past year, the growth of generative AI has fueled the chip stocks, with the expectation that AI will change the way technology works. This growth has been driven by investments in large cloud service providers building out data centers and OEMs making AI servers.
Despite the recent pullback in the market, Bryson believes that this investment will continue into 2025 and beyond, ensuring strong numbers and growth for chip companies.
The Effect of Interest Rates on AI Stocks:
While high interest rates can weigh on the market and consumer spending, Bryson argues that they will not significantly change the fundamental landscape for tech.
He believes that large data center operators, such as Microsoft and Amazon, will continue to invest in AI, regardless of interest rates, as they do not want to miss the next technology wave.
Bryson also highlights the potential for the next generation of AI architecture, which allows for increased parameters, to drive further investment in AI.
The Future of AI Stocks:
Bryson is optimistic about the future of AI stocks, particularly those that are committed to investing in AI technology.
He believes that companies that have made the decision to commit capital will continue to do so until they see applications that take advantage of the increased capability of AI models.
However, beyond that point, the success of AI stocks will depend on the emergence of new applications that drive consumption and further investment in AI.
What new applications will drive consumption and further investment in AI, and how will they impact the future of AI stocks?
FAQs:
What is the current state of the AI market?
The AI market has experienced significant growth in recent years, with companies like Nvidia, AMD, and Intel seeing strong growth.
Despite the current macroeconomic environment with higher interest rates, the thesis of AI’s potential to shift the way technology works remains strong.
How will interest rates affect AI stocks?
Bryson believes that while high interest rates can weigh on the market and consumer spending, they will not significantly change the fundamental landscape for tech.
He argues that large data center operators will continue to invest in AI, regardless of interest rates, as they do not want to miss the next technology wave.
What is the future of AI stocks?
Bryson is optimistic about the future of AI stocks, particularly those that are committed to investing in AI technology.
He believes that companies that have made the decision to commit capital will continue to do so until they see applications that take advantage of the increased capability of AI models.
However, beyond that point, the success of AI stocks will depend on the emergence of new applications that drive consumption and further investment in AI.
