Photo by Steve Johnson on Unsplash

An Introduction

Recent articles here have suggested that the AI sector was weakening, and that was clearly evident in the results of March and confirmed this week. The Global X Artificial Intelligence & Technology ETF (AIQ) of 91 constituents - which best reflects the AI sector as a whole - had gone up 8.4% in February but was only up 2.0% in March. This week, however, it was down 0.1%. On a specific category basis, while none of the 7 categories covered by munKNEE.com went down in February, 3 did so in March and this week 6 of the 7 did so. This confirms my conclusion that the data clearly indicates that the surge in this sector is stalling or perhaps even over.

7 AI Categories Compared

Below is how each category performed this week in comparison to each other to help you make prudent investment decisions going forward. The categories are presented with data:

• for this week, in descending order,
• YTD to provide a short-term trend in each category,
• along with a description of what makes up each category,
• the stocks included in each category,
• those stocks in each category that went up the most during the week, and the least
• and commentary on those stocks that made significant moves this week, where available.

1. AI-enabled Personal Computer Category: up 2.7% this week; up 19.8% YTD
   • Description: A computing revolution is beginning as a result of the introduction of neural processing units in the latest chip designs which will result in a coming decade of growth in PC upgrades and innovation. This portfolio tracks the stock performances of the companies that have introduced, or plan to introduce, AI-enabled PCs in 2024.
   • 4 Constituents: DELL (+16.3%), MSI (0.8%), HPQ (-3.6%) and LNVGY (-4.1%).
   • Article:
     • Dell Technologies Hit a 52 Week High, Can the Run Continue? 
2. Custom Design EDA Software Category: down 0.4% this week; up 6.6% YTD
   • Description: The stock prices of electronic design automation (EDA) software companies creating custom designed chips is set to take off given a projected 11% CAGR in the category between now and 2028. This portfolio tracks the stock price changes of 3 companies in this category.
   •  3 Constituents: SNPS (+0.7%) which is acquiring ANSS, CDNS (-1.0%) and ANSS (-1.5%) .
   • Article:
     • Is There Now An Opportunity In Synopsys?
3. Semiconductor (Chip) Category: down 0.7% this week; up 24.7% YTD
   • Description:  The price of AI chip stocks surged by 64% in 2023 and many analysts think there is an excellent chance that the boom will continue in 2024 and this portfolio tracks the stock performances of the major players in this category.
   • 15 Constituents:  MU (+4.8%), ENTG (+4.6%), TSM (+3.9%), MRVL (+2.5%), QCOM, LRCX, AMAT, AVGO,  ASML, KLAC (-2.3%), NVDA (-2.6%), MKSI (-3.3%), MPWR (-3.4%), AMD (-5.5%) and ATEYY (-9.7%),
   • Article:
     • Micron Technology is Attracting Investor Attention: Here is What You Should Know
4. Cloud Computing Software Category: down 2.1% this week; up 3.0% YTD
   • Description: Given the dramatic 37.3% CAGR forecast of the AI market between now and 2030, the 18.5% surge in the amount being spent on cloud computing SaaS and the major annual rental rate increases of data centers (18.5% in 2023) expected in the future, should greatly benefit the data center industry.
   • 8 Constituents: PSTG (+3.5%), ANET (+3.3%), DLR, VRSN, DDOG, BOX (-3.1%), DBX (-4.2%), and EQIX (-5.0%).
   • Articles:
     • Pure Storage is a favorite amongst institutional investors who own 81%
     • With 70% institutional ownership, Arista Networks is a favorite amongst the big guns
     • Dropbox CFO Timothy Regan Sells 9,905 Shares
     • Box Director Dana Evan Sells 11,000 Shares
     • Equinix (EQIX) commences investigation into short-seller Hindenburg's report
5. Quantum Computing Category: down 2.3% this week; up 6.1% YTD
   • Description: Quantum computing is still years away but it will change the world when it arrives and, as such, it is important to keep abreast of the major companies involved in its research and development and this portfolio does just that.
   • 9 Constituents: MU (+4.8%), BIDU (+1.1%), HON, IBM, INTC, AMD (-5.6%), QBTS (-7.8%), IONQ (-7.8%), and RGTI (-12.4%).
   • Articles:
     • Should Investors Buy the Correction in AMD Stock?
     • D-Wave Reports Fourth Quarter and Year-End 2023 Results
     • Rigetti Computing (RGTI) Reports Mixed Results Amid Strategic Advances in Quantum Computing
6. Cybersecurity Software Category: down 2.4% this week; up 1.8% YTD
   • Description: Given the anticipated 14% increase in spending on cyber security in 2024, this portfolio tracks the performance of the largest cyber security software stocks expected to realize sizable returns again in 2024.
   • 10 Constituents: FTNT (+3.8%), CHKP, CRWD, QLYS, VRNS, TENB (-2.3%), S (-3.0%), CYBR (-3.1%), ZS (-4.8%), and PANW (-5.3%).
   • Articles:
     • An Intrinsic Calculation For Fortinet Suggests It's 26% Undervalued
     • Palo Alto Networks Stock Drops Despite Market Gains: Important Facts to Note
     • Zscaler: Facts to Know Before Betting on It
7. AI-Powered Drug Discovery Category: down 6.3% this week; up 15.2% YTD
   • Description: AI-powered drug discovery holds massive potential to increase the accessibility of drugs and to treat presently incurable conditions and this portfolio highlights the most prominent clinical-stage biopharma tech companies using AI to power their research and development.
   • 8 Constituents: ABSI (+3.6%), SDGR, ABCL (-3.3%), BTAI (-5.7%), RXRX (-11.0%), LTRN (-11.8%), EXAI  (-15.4%), and RLAY (-16.9%).
   • Articles:
     • Is Recursion Pharmaceuticals Stock a Buy?
     • Does Relay Therapeutics Have the Potential to Rally 146.52% as Wall Street Analysts Expect?

The AIQ Global X Artificial Intelligence & Technology ETF (AIQ) of 91 constituents went down 0.1% this week but is still up 8.8% YTD.

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