The stock market’s biggest bet is setting investors up for a smackdown

Wall Street really needs Amnesty International to upgrade noise.

Many have been said about the changing global potential of emerging technology: its ability to create amazing realistic images and videos, Ace the LSAT and MCAT, and the full search for heart. You can say that it is ready to increase jobs-or even replace beginners.

These features have investors up and down on the street very excited. Their strong supporters such as Tom Lee from Fundstrat and Wedbush from Dan IVES said that Amnesty International can revolutionize the human experience. Research offices from large banks such as Goldman Sachs and Bank of America gave more accurate gestures to the possibility of artificial intelligence as production and profit support, which can provide hidden for the success of the stock market over the next few years.

In fact, analysts depend on the mania of artificial intelligence to feed the market even as the White House chaos policy is eaten in the capabilities of American companies. The profits of the S&P 500 companies are expected to grow by 8 % this year, which is a somewhat average width of anything but on average. What draws attention is the amount of this growth depends on the technology sector: Silicon Valley companies are expected to enhance their profits by 21 % – the highest growth in any sector. On the contrary, retail profits are expected to grow by 2.5 %.

Within the technology sector, semiconductor companies – one of the world’s most exposed industries in the stock market – are expected to enjoy this year, with an expected increase of 49 %. This enthusiasm is the Wall Street signal that is betting that the demand for cases of artificial intelligence will determine the neglect of the customs tariff or the fluctuation of the labor market.

The growth of artificial intelligence was amazing, and its dependence was strong enough to leave its fingerprints on economic data groups such as investing business and spending on manufacturing. However, regardless of the extent of the world’s capabilities, the amount on which investors depend on technology to feed market gains-especially in the face of increased economic uncertainty-in light of looking. Technology shares helped market to recover from a feeling of maleness in April, however profit expectations and economic momentum are weaker than they were at the lowest point in the sale. This mixture leaves the stock market in a risk -framed place: either AI needs to rise to the noise level, or investors can look in the second half of the year.

One of the ways to tell the story of the history of mankind is our technique – Lightbulb, the calculator, jars, and all of them as signs of our societal progress and helped to advance the level of efficiency and productivity that we enjoy.

Tech may have played a prominent role in our investment portfolios. Apple, Amazon, Alphabet, Meta, Microsoft, Tesla and NVIDIA – combined $ 18 trillion, or about 33 % of the total market value of S&P 500. Together, stock prices increased by 330 % over the past five years, compared to 100 % in S&P 500.

From logical. Big Tech products are deeply integrated in our daily life, and this level of everywhere has taken the attention of Wall Street. The collection of donations in the investment capital reached a record in the first quarter amid a huge appetite for investment of artificial intelligence, and S&P 500 mentioned Amnesty International than the customs tariff in collective calls in the second quarter.

The US stock market of 65 trillion dollars may be held in particular by the rise and landing in the Big Tech these days, but it was not always this way. The average technology has reached about 20 % of the market value of the S&P 500 over the past decade, including 13 % in the five years before Covid. Hegemony has not been placed in the stone, and although the wealth of the broader market is now linked to technology, this may not be always the case.

Although the stock market may seem to serve as one major agent for an explosive growth in the technology sector at the present time, there is a deeper connection that must draw the attention of investors. Over time, the S&P 500 was attached to the hip to the fate of the wider American economy. Eight 12 accidents in the past market – S&P declines by 20 % or more – interfere with running. Regardless of the high industry, the recession tends to withdraw stock prices and commercial hopes to Earth. The Internet revolutionized the world in the late 1990s, and the explosion on social media took control of 2010, but the information sector threw the employees and witnessed shares prices decreased in the past three recessions.

Looking at this setting, we set the way for Smackdown wallet on the ages. Economists are concerned that the recession is coming, yet investors are amazingly optimistic about the prospects for artificial intelligence – which exceeds that the S&P 500 technical shares are almost the highest standard. Analysts on the sales aspect of the company’s level levels are optimistic. But in the real economy, workers’ layoffs grow, and employment has stopped. Vacccharged opinions between economists and arrow analysts mean that someone should be wrong. The shipping train, which is the adoption of artificial intelligence-a three-year story of rapid innovation and progress-with a huge garden of historical definitions, high interest rates, and low consumer confidence.

What is particularly rich in this is that technology companies are the most vulnerable to global definitions. They collect the highest percentage of revenues at the international level, in addition to that they have most suppliers and factories outside the American border. In fact, semiconductor companies – companies that offer chips for artificial intelligence technology – are expected to reach 49 % profit growth despite the generation of 67 % of their revenues abroad and 70 % of their supplies from abroad.

Some analysts believe that if AI can surely keep the stock market wandering, it may do the same with the economy. After all, companies invested $ 2.2 trillion amended on computers and other processing equipment in the last quarter, or about seven trillion US dollars spending on goods and services. Investment in artificial intelligence ultimately helps in increasing the economy, but 2 trillion dollars is peanut compared to the real engine of the American economy. Americans spending about 70 % of GDP – to a large extent the largest production engine – has decreased spending in both the past nine stagnation. If the definitions intimidate consumers and lead to the demobilization of workers that determine the American entry, it is possible that the economy is linked to a crisis – whether the robots come out or not. Based on history, an economic securities crisis can fall.

Mathematics explains to us that artificial intelligence does not serve as an identical to some effects of definitions, and it may not be insufficient to save the economy from ruin. The result of your wallet may be a different story.

This is when I have to introduce you to one of the most frustrating notifications of investment: the stock market is not the economy.

The economy is the value that we create – solid assets, criticism that has been spent, and the salary we get. Arrows are an expression of this value, but they use the current reality to expect future expectations. The impact of artificial intelligence on the economy may not bear the numbers. But in your wallet, the impact of artificial intelligence depends on our willingness to prepare collectively on better days in the coming in terms of what AI can, and the amount of money that dominant companies will achieve on artificial intelligence in the coming years. The dream is already a large part of the artificial intelligence trade. S& P 500 profits for technology companies grew around 50 % in 2023 and 2024, however their stock prices jumped by 112 %.

Nothing is cut and dried when it comes to the stock market. It is the ultimate interlocking network of logic, psychology and mixed incentives. The future of the stock market depends on the ability of investors to dream, and people are ready for a dream when they feel confident at the present time.

The problem is that investors are very confident of technology shares today. The S&P 500 technology companies have reached about 23 % of total indicators profits in the first quarter, however their shares represent 32 % of the S&P 500 value. To overcome this gap, technical profits must grow by 40 %, or technology shares must decrease by 29 % of the end levels of June.

The stocks can flourish when expectations are higher than reality, but in these circumstances, they require reasons for survival optimistic. The problem arises when investors do not want a dream. When they focus on current issues to give convincing stories the benefit of doubt. Or in the large market drops, crushed financial pressure.

Then, the numbers are important. People are talked to any concrete evidence of the value of artificial intelligence. They demand the proof of profits, although companies spend the money on the axis to the next big thing. The price of stocks is modified, and if you have a group of American stocks or index boxes, perhaps your money will be strongly displayed to this check.

This is what happened in 2000. Investors were ready to dream about this new courageous technology called the global web network until interest rates have increased significantly, and the fact that the necessary computing for Y2K was exaggerated. Suddenly, the dream died, and technical stock prices returned to reality. These days, we all know that the dream was not completely out of the base. However, stock prices have taken a decrease of 80 % before the fruits of the new technology.

This is what I am concerned about the most clash between artificial intelligence and economy. We are somewhere between Amnesty International, which saves the world and the formation of a full -time bust of technology that can explode by another country. I am not foolish enough to call this bubble, and I think artificial intelligence will ultimately provide benefits for our economy.

We are not there yet, although investors love to think about it. It takes years to take large technological trends, and productivity usually shines when workers feel empowering and companies feel comfortable with expansion. This is far from the situation at the present time – the confidence of work in the dumps, so we are in the opposite scenario.

When the economy becomes weaker, it is better to understand what is real in your wallet. There is an amazing gap between artificial intelligence and reality.

Cali Cox is the largest market strategy in Ritholtz wealth management And author of a book optimisticNews Message from Wall Street quality research for ordinary investors. You can display the retruitzers ’disclosures here.

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