Photo by Steve Johnson on Unsplash

An Introduction

I mentioned in my article last week that the increase in the number of categories declining period after period (no category went down in February, 3 went down in March, 6 went down last week and ALL 7 went down this week) clearly indicated that "the surge in the AI sector is stalling or perhaps even over". This week's category performances affirms that the surge that began back on October 31st is, indeed, over. The Global X Artificial Intelligence & Technology ETF (AIQ) of 91 constituents - which best reflects the AI sector as a whole - seconds that fact having gone up 8.4% in February, just up 2.0% in March, down 0.1% last week, and now down 1.6% this week.

7 AI Categories Compared

Below is how each category performed, in descending order:

• this week,
• 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. Semiconductor (Chip) Category: down 0.7% this week; up 23.8% 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:
   • TSM (+0.8%), MU, QCOM, LRCX, AMAT, AVGO,  ASML, KLAC, NVDA, MPWR, MRVL (-3.4%), AMD (-4.1%), ENTG (-4.3%), MKSI (-4.6%), and ATEYY (-5.0%).
     • Article:
       • Can Taiwan Semiconductor (TM) Stock Replicate Nvidia’s Performance?
       • Marvell (MRVL) Touts New AI Business But Market Shrugs
       • Advanced Micro Devices' (AMD) five-year total shareholder returns outpace the underlying earnings growth
2. Cybersecurity Software Category: down 1.2% this week; up 1.2% 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:
   • PANW (+3.8%), CHKP, CRWD, QLYS, VRNS, TENB, ZS, CYBR (-3.5%), S (-3.9%), and FTNT (-6.3%).
   • Articles:
     • Here's Why Palo Alto Networks (PANW) Has Caught The Eye Of Investors
     • Fortinet's (FTNT) 6.3% decline adds to one-year losses, institutional investors may consider drastic measures
3. Cloud Computing SaaS Category: down 1.7% this week; up 22.9% 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: TEAM (+5.0%), SNOW (+3.1%), NOW, WDAY, CRWD, INTU, ADBE, ADSK (3.2%), and SHOP (-7.0%).
   • Articles:
     • Why Atlassian (TEAM) Stock Is Moving Higher
     • Autodesk (ADSK) Stock Drops On Accounting Investigation
     • Shopify (SHOP) Stock Dips While Market Gains: Key Facts
4. Custom Design EDA Software Category: down 2.3% this week; up 4.1% 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:  CDNS (-0.7%), ANSS (-2.2%), and SNPS (-3.2%) which is acquiring ANSS.
   • Article:
     • Cadence Design Systems (CDNS) Exceeds Market Returns: Some Facts to Consider
     • Is The Market Rewarding ANSYS (ANSS) With A Negative Sentiment As A Result Of Its Mixed Fundamentals?
5. AI-Powered Drug Discovery Category: down 2.9% this week; down 17.7% 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:
   • BTAI (+9.0%), ABSI, SDGR, ABCL, RLAY, EXAI  (-3.7%), RXRX (-5.2%), and LTRN (-17.7%).
   • Articles:
     • BioXcel Therapeutics (BTAI) Announces Tranquility In-Care Pivotal Phase 3 Trial Plan With BXCL501 for Agitation Associated With Alzheimer’s Dementia
6. Quantum Computing Category: down 3.5% this week; up 2.4% 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: HON (-0.5%), MU (-0.9%), IBM (-3.6%), AMD (-4.2%), INTC (-7.8%), BIDU (-8.4%), RGTI (-11.9%), IONQ (-12.8%), and QBTS (-13.3%).
   • Articles:
     • Honeywell International (HON) Stock Moves -0.5%: What You Should Know
     • China Tells Telecom Carriers to Phase Out Foreign Chips in Blow to Intel, AMD
     • Are Baidu's (BIDU) Mixed Financials The Reason For Its Gloomy Performance on The Stock Market?
     • Rigetti Computing (RGTI) Stock Dips While Market Gains: Key Facts
7. AI-enabled Personal Computer Category: down 9.5% this week; up 8.4% 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:
   • HPQ (-2.0%), MSI (-2.4%), LNVGY (-5.4%), and DELL (-11.3%),
   • Articles:
     • HP sued by Wex for trademark infringement over 'Wex' software
     • Investors Heavily Search Dell Technologies (DELL): Here is What You Need to Know

The above analysis covers 56 different stocks of which 47 (84%) went down in price last week, revealing that the decline is widespread.

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