1 December 2023

In 2023, the tech world made a big comeback, and it’s thanks to two main things: the exciting possibilities in artificial intelligence (AI) and stubbornly positive global economic conditions.

The NASDAQ-100® has been rising throughout the year, driven by titans like Alphabet, Amazon, Apple, NVIDIA, and Microsoft—and their investors, who see significant growth and opportunities for innovation in AI. The star of the tech world since ChatGPT’s debut in late 2022, AI has been game-changing for these companies over the last year, making them more efficient and profitable.

While every key tech company has pivoted to AI to some degree, Microsoft and NVIDIA are leading the way, with Microsoft integrating AI into its products, and NVIDIA making the dedicated chips needed for AI. These moves have boosted both companies’ stock prices, and as we look ahead to 2024, Microsoft and NVIDIA stand out as key leaders in the tech world, showing us how artificial intelligence will shape the future of technology.

2023 a Banner Year for the NASDAQ-100®

The NASDAQ-100® is the gold standard for technology-focused investors, thanks to the outsized role tech companies played in the index, influencing overall returns. With ~55% of the value of the NASDAQ-100® driven by tech giants, the index’s remarkable turnaround in 2023 is attributable to the renewed performance of these companies thanks to AI.¹

Over the first three quarters of 2023, the NASDAQ-100® rose to 18-month highs and had its best first-half performance since 1999.²

Apple, Alphabet, Amazon, Meta, Microsoft, and NVIDIA—all included in the index—are focused on AI development, whether that’s hardware for data-intensive computations, providing cloud infrastructure platforms, or creating cutting-edge AI interface software.³ As a result, these companies have all outperformed the broader market in 2023, with Apple and Microsoft hitting all-time highs, and NVIDIA tripling in value to on their way to a $1 trillion valuation.⁴ Their contributions have been instrumental in the technology sector’s resurgence and booming performance in 2023.

AI’s Lasting Impact on Big Tech

Though it has only been a year, artificial intelligence has already shown itself to be a transformative force for Big Tech.

Unlike past trends such as NFTs, which generated hype but had limited real-world applications, AI has proven to be a lasting and practical solution and one that big players like Google, Meta, Amazon, and Apple are not merely following; they are actively reshaping their products with it.⁵

Google, for instance, has integrated advanced AI models like PaLM 2 into its chat service, Bard, propelling it to handle diverse tasks, including information retrieval from the web.⁶ Meanwhile, Apple is making strides with its own AI chatbot nicknamed “Apple GPT,” harnessing the power of its LLM foundation, Ajax.⁷ Meta and Amazon are not far behind, likewise infusing AI into their technologies and services.

As AI continues to manifest as a tangible force in Big Tech, its impact on innovation is proving to be not just a trend but a lasting megatrend shaping the future of both technology and the technology sector.

Why Microsoft and NVIDIA Are Leading the AI Revolution

However, of all the tech companies benefiting from the introduction of AI, the far-and-away leaders of the pack are Microsoft and NVIDIA.

Microsoft is riding a wave of positive momentum in the stock market, and it’s no accident. The tech giant’s strategic pivot towards artificial intelligence (AI) is a key driver of its success. Notably, Microsoft’s astute investments in OpenAI—to the tune of a $13 billion stake in the startup—have paid off, with the integration of the widely used AI chatbot, ChatGPT, into its array of products.⁸ The recent rollout of Microsoft 365 Copilot, for example, marks a substantial leap in incorporating chatbots into flagship products.⁹

Moreover, with the recent turmoil at OpenAI, now that the dust has settled, Microsoft looks to be in the catbird seat as the startup’s new board is assembled. Having spearheaded the efforts to reinstate Sam Altman as OpenAI’s CEO, by getting all parties to agree to a new, nine-person board that will foster stability and effective governance, as chief investor Microsoft may potentially receive multiple seats, ensuring their voice will not just be heard but guide the progress of OpenAI.¹⁰

Likewise, NVIDIA, maker of graphics processing units (GPUs) critical to AI training and functioning, has been going from strength to strength in 2023. In May, the chip maker joined the exclusive $1 trillion dollar club, and in November, posted results that surpassed analysts’ estimates for both revenue and income in Q3.^{11 12}

NVIDIA reported a staggering 206% YoY revenue growth in Q3, reaching $9.24 billion in net income, up from $680 million for the same time last year. Notably, data center revenue soared to $14.51 billion, with half stemming from cloud infrastructure providers like Amazon. The gaming segment—once NVIDIA’s chief revenue source—also thrived, contributing $2.86 billion, an 81% increase year-over-year. NVIDIA’s projections for Q4 are for $20 billion in revenue, implying a remarkable 231% growth.

NVIDIA also unveiled the GH200 GPU, featuring enhanced memory and additional processors. These new GPUs will have applications that include bitcoin mining as well as a forthcoming deployment as part of Oracle’s cloud service.

Despite NVIDIA’s success in 2023, its origin is somewhat ironic. The demand for GPUs from NVIDIA surged after the debut of Microsoft-backed startup OpenAI’s ChatGPT and Microsoft’s pivot to include AI in its products, prompting NVIDIA to shift its focus away from gaming and towards AI server farms, where most revenue is now generated.¹³

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Sources 

1. Chen, J., “Nasdaq 100 Index: What It Is, How It’s Weighted and Traded,” Investopedia, December 31, 2021; https://www.investopedia.com/terms/n/nasdaq100.asp
2. Cochintu, C., “NASDAQ 100 Forecast & Price Predictions November 2023, 2024, and Beyond: AI drives best performance since 1999,” CAPEX.com, November 2, 2023; https://capex.com/en/overview/nasdaq-100-price-prediction
3. Chen, J., “Nasdaq 100 Index: What It Is, How It’s Weighted and Traded,” Investopedia, December 31, 2021; https://www.investopedia.com/terms/n/nasdaq100.asp
4. Mozée, C., “NVIDIA achieves $1 trillion market cap for the first time as AI-fueled stock surge continues,” Markets Insider, May 30, 2023; https://markets.businessinsider.com/news/stocks/NVIDIA-stock-price-ai-artificial-intelligence-trillion-valuation-chipmaker-gpus-2023-5
5. Cochintu, C., “NASDAQ 100 Forecast & Price Predictions November 2023, 2024, and Beyond: AI drives best performance since 1999,” CAPEX.com, November 2, 2023; https://capex.com/en/overview/nasdaq-100-price-prediction
6. Ortiz, S., “What is Google Bard? Here’s everything you need to know,” ZDNET, June 1, 2023; https://www.zdnet.com/article/aws-hones-in-on-generative-ai-at-summit-and-unveils-new-ai-projects-here-are-the-highlights/
7. Gurman, M., “Apple Tests ‘Apple GPT,’ Develops Generative AI Tools to Catch OpenAI,” Bloomberg, July 19, 2023; https://www.bloomberg.com/news/articles/2023-07-19/apple-preps-ajax-generative-ai-apple-gpt-to-rival-openai-and-google
8. Fried, I., “Microsoft is a key investor in OpenAI. It was blindsided by Sam Altman’s exit,” Axios, November 18, 2023; https://www.axios.com/2023/11/17/microsoft-openai-sam-altman-ouster
9. Warren, T., “Microsoft’s new AI-powered Office assistant is here — if you’ve got $9,000 and 300 friends,” The Verge, November 1, 2023; https://www.theverge.com/2023/11/1/23942155/microsoft-365-copilot-ai-office-documents-launch-business-enterprise-pricing-release-date
10. Metz, R., Chang, E. & Savov, V., “Altman Returns as OpenAI CEO in Chaotic Win for Microsoft,” Bloomberg, November 22, 2023; https://www.bloomberg.com/news/articles/2023-11-22/sam-altman-to-return-as-openai-ceo-with-a-new-board
11. Mozée, C., “NVIDIA achieves $1 trillion market cap for the first time as AI-fueled stock surge continues,” Markets Insider, May 30, 2023; https://markets.businessinsider.com/news/stocks/NVIDIA-stock-price-ai-artificial-intelligence-trillion-valuation-chipmaker-gpus-2023-5
12. Schafer, J., “NVIDIA earnings crush Wall Street estimates again, company tempers China outlook,” Yahoo Finance, November 21, 2023; https://finance.yahoo.com/news/NVIDIA-earnings-crush-wall-street-estimates-again-company-tempers-china-outlook-212952215.html
13. Novet, J., “NVIDIA’s revenue triples as AI chip boom continues,” CNBC, November 21, 2023; https://www.cnbc.com/2023/11/21/NVIDIA-nvda-q3-earnings-report-2024.html

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