AI stocks in the S&P 500 have outperformed this year - and not just the 'Magnificent Seven'

By Christine Idzelis

Sixty-seven AI-related stocks in the S&P 500 have surged since the release of ChatGPT, according to Bespoke analysts

It's not just the top seven companies in the S&P 500 that are benefiting from the stock-market craze around artificial intelligence, according to Bespoke Investment Group.

Sixty-seven stocks in the S&P 500 that are related to AI have surged by an average of 45.3% since the end of November 2022, "when the first iteration of ChatGPT was released to the public," Bespoke said in a note emailed Tuesday. "The remaining 433 non-AI stocks in the S&P 500 are up just 9.2% over the same time frame."

Nvidia Corp. (NVDA), the closely watched chip maker that has benefited massively from investor enthusiasm around AI, will report its fourth-quarter earnings results after the U.S. stock market's close on Wednesday. The company's gigantic market value of around $1.8 trillion places it among the top weights in the S&P 500, whose gains last year were propelled by a group of seven megacap tech stocks.

"AI stocks continue to garner most of the investment world's attention," said Bespoke. The firm found that "year to date, the average S&P 500 AI stock is up 3.7% compared to a gain of 1.1% for the non-AI stocks."

Shares of Nvidia were falling around 6% on Tuesday afternoon - but even with that drop, the stock has surged more than 37% this year, according to FactSet data, at last check.

The S&P 500 's technology sector XX:SP500.45, which includes Nvidia, is up more than 5% so far in 2024 as of Tuesday afternoon's trading.

Meanwhile, shares of the Roundhill Magnificent Seven ETF MAGS -whose megacap holdings include Microsoft Corp. (MSFT), Apple Inc. (AAPL), Nvidia, Amazon.com Inc. (AMZN), Facebook parent Meta Platforms Inc. (META), Google parent Alphabet Inc. (GOOGL) (GOOG) and Tesla Inc. (TSLA) - have climbed almost 8% this year to date, according to FactSet data, at last check.

The S&P 500 has lagged over the same period and is up around 4% in 2024.

Five of the "Magnificent Seven" stocks have risen this year, with gains led by Nvidia. Only Apple and Tesla are in the red so far in 2024.

"Some of the most widely followed large-cap AI stocks" beyond the Magnificent Seven include companies such as Advanced Micro Devices Inc. (AMD), ServiceNow Inc. (NOW), Broadcom Inc. (AVGO), Intuitive Surgical Inc. (ISRG), Salesforce Inc. (CRM) and Intel Corp. (INTC), according to the Bespoke note. While Intel is down this year, the rest of those six have posted gains exceeding the S&P 500's so far in 2024.

But on Friday, the 67 AI-related stocks in the S&P 500 tracked by Bespoke "took a breather" and fell by an average of 1.3%, while the "non-AI stocks" slipped just 0.3%, the firm's note shows.

U.S. stocks were declining Tuesday, after the three-day weekend honoring Presidents Day on Monday. The S&P 500 SPX was down 0.8% in afternoon trading Tuesday, while the Dow Jones Industrial Average DJIA shed 0.2% and the tech-heavy Nasdaq Composite COMP dropped 1.3%, according to FactSet data, at last check.

Read: Higher interest rates are needed to pop the AI 'baby bubble' in stocks, BofA says

-Christine Idzelis

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02-20-24 1345ET

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