Almost all the current strength in the NASDAQ and the S&P 500 is focused on seven stocks expected to benefit from ChatGPT, a popular form of artificial intelligence developed by a Startup Company named Open AI. The possibility is growing that the Market is starting to generate a substantial bubble in the Tech market.
While the benefits from ChatGPT will be many, it will take a while to incorporate it into existing software and there is no guarantee that it will generate large monetary profit for the Market as a whole, and even if it does, that benefit will come soon enough to justify the current media attention.
The strength in these seven large tech stocks; Apple, Microsoft Meta, Alphabet, Amazon, Oracle, and NVidia, makes it appear that the Market is rallying, yet 70% of the stocks in the S&P500 are still in a downtrend and present us with the possibility that the current market uptrend is a sucker rally.
It is not likely ChatGPT is not capable of carrying the broad Market to a new high, and the lack of more participation by the rest of the Market is a symptom of a market about to turn down.
With the Fed still fighting inflation and with interest rates likely to stay elevated for the rest of the year, there is a strong possibility of a recession in the last half of this year, and it would not appear that this is not a good time to be chasing the ChatGPT bubble. In view of the above, we feel that now is a time to build a little cash and wait for better prices this fall. In addition, while, ChatGPT is sure to provide profitable investment opportunities in the future, it seems too early to pick out which of these stocks will be the biggest winners.