In 2023, the S&P 500 staged an impressive comeback, but the lion’s share of the surge was credited to the remarkable gains of its 7 tech titans, often hailed as ‘The Magnificent Seven.’ Their meteoric rise, with some stocks surging by over 200%, was underpinned by the insatiable demand for generative AI services, exemplified by ChatGPT.
However, this concentration raised concerns about the sustainability of the stock market‘s rally.
In pursuit of further insights, Finbold turned to predictive AI and sought the wisdom of ChatGPT to forecast the S&P 500’s year-end price, shedding light on the future of potential future trajectory.
ChatGPT highlights 2 factors impacting S&P 500’s performance
In its reply to our query, the remarkable AI bot said the S&P 500’s outlook for the end of 2023 hinges on a multitude of factors, primarily the sustainability of the current AI expansion and the Federal Reserve’s (Fed) interest rate policy.
“The ongoing artificial intelligence (AI) boom has been a driving force behind Big Tech stocks and, consequently, the S&P 500’s performance in 2023. AI-driven technologies have seen extensive adoption across industries, contributing to revenue and profit growth for tech companies. If this trend persists, it could continue to bolster the S&P 500.”– ChatGPT wrote in the response.
At the same time, recent remarks by the Fed hinting at its plans to keep interest rates ‘higher for longer,’ could exert pressure on stock prices, and potentially turn investors’ attention toward other assets.
Based on the factors explained above, and the stock market’s historical performance which demonstrated that the S&P 500 has generally shown a tendency to trend upward, ChatGPT outlined two scenarios in its 2023-end hypothetical prediction.
In its bullish outlook, the OpenAI’s chatbot said that if the AI boom continues to serve as a catalyst and corporate earnings of US companies remain strong, “there’s a potential for the S&P 500 to maintain its upward trajectory.”
“In this scenario, the index could reach new highs, surpassing 4,500 or even higher by year-end.”– the AI tool added.
At the same time, if more economic headwinds begin to emerge, such as a significant downturn in the tech sector, global economic instability, or a more aggressive tightening of monetary policy by the Federal Reserve, the S&P 500’s growth could be hindered.
In this case, the index might experience more modest gains or even a decline, closing the year around 4,300 or lower, the AI tool added.
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