According to a report from venture capital firm Accel, U.S. tech giants added $2.4 trillion to their market capitalizations in a year dominated by the hype around generative artificial intelligence. The tech-heavy Nasdaq Composite returned to 80% of its all-time high within 18 months. The share price values of big technology firms such as Apple, Microsoft, Alphabet, Amazon, and Nvidia rose by an average of 36% year over year. Nvidia, with its high-performance chips powering advanced generative AI models, reached a valuation of over $1 trillion, joining the trillion-dollar club. The report also highlights the faster recovery of the Nasdaq Composite compared to after the dotcom bust in the 1990s. The Euroscape index, which includes cloud and software-as-a-service names, rose 29% in the year to date. The report emphasizes the role of generative AI in driving the performance of cloud and SaaS, with AI being described as a technology that is redefining software and being leveraged by companies across different stages. The report also discusses the shifting focus to profitability in the tech industry, as well as the decline in deal-making activity by Big Tech companies due to regulatory concerns.
| Signal | Change | 10y horizon | Driving force |
|---|---|---|---|
| U.S. tech giants increase market capitalizations | Increase in market value | Continued growth in value of tech giants | Hype around generative AI and high-performance chips |
| Nasdaq Composite reaches 80% of all-time high | Faster recovery from market downturn | Tech industry rebounds quickly from downturn | Strong performance driven by generative AI technology |
| Cloud and SaaS companies regain value | Recovery from market downturn | Increased value and funding for cloud and SaaS | Stabilization of tech market and renewed investor interest |
| Generative AI drives performance of tech industry | AI becomes pervasive in software industry | Generative AI reshapes software industry | Potential for innovative and transformative AI technologies |
| Shift towards profitability in tech sector | Focus on short-term profits | Tech companies prioritize profitability over growth | Investor shift and higher interest rates |
| Decline in deal-making activity by Big Tech | Decrease in acquisitions by tech giants | Regulation impacts acquisition activity | Regulatory concerns and scrutiny of tech giants |