{Stock Market Hero} How This Sector Single-Handedly Revived the Markets

Revitalizing the stock market has been the happy side effect of this hot stock trend. Sponsored [Unlock a 15x ROI with Alternative Energy Investment]( Are you searching for a lucrative investment opportunity in today's unpredictable market? We have the perfect solution for you: the alternative energy sector, promising an incredible 15x return on investment.[Go HERE to see the Potential Investing Opportunity]( By clicking the link you are subscribing to The Premium Market News Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy. [Privacy Policy/Disclosures](  The Potential Impact of AI in Revitalizing the Stock Market [Image]  Hello Stock Traders,  Just popping in to let you know that the wizards over at Traders on Trend’s eagerly awaited Summer Market Summit start today! From 9 AM to 5 PM, they'll be featuring a diverse line-up of 8 unique speakers each day, continuing right up until Thursday.  [You can still catch up and join here!](  Moving on to our newsletter... Can you believe the state of the stock market these days? It's all thanks to artificial intelligence (AI), which has been triggered into hyperdrive by the sudden popularity of ChatGPT. We're talking the creation of stock market value amounting to trillions of dollars, folks. Yes, you heard it right - trillions. Take a look at Nvidia. It has skyrocketed over 175% this year, breezing its way into the $1 trillion club. Meta has also seen an impressive 119% increase. Even behemoths like Alphabet and Microsoft have yielded nearly 40% returns. All this excitement in the AI realm is keeping the stock market afloat despite the US economy seemingly inching towards a recession and Congress playing hot potato with the nation's debt limit. Speaking of the S&P 500, it's basically been treading water since the beginning of April. It's like watching a sea-saw; the AI fervor offsets the numerous economic challenges that continue to surface. It's almost as if AI has become the new superhero in the stock market universe, swooping in to balance out the negative forces that threaten to pull stocks lower. Quite the storyline, isn't it? Now, here's the intriguing part - there are two pivotal elements at play: the anticipated surge in productivity driven by AI adoption and the expected positive impact on profit margins, which are traditionally the main force behind stock gains. Academic researchers are not just spectators in this potential AI-led productivity explosion. According to a study conducted by Stanford and MIT, workers at a Fortune 500 software company who used generative AI tools became 14% more productive. The least experienced workers even managed to up their productivity game by nearly 30%.  Investment gurus are also joining the AI bandwagon. Billionaire investor Paul Tudor Jones was so taken aback by the astonishing mainstream popularity of AI that he had to reassess his forecasts for inflation and the stock market.  Meanwhile, Ed Yardeni, a seasoned market pundit, who served as the chief investment strategist for Oak Associates, Prudential Equity Group, and Deutsche Bank, thinks AI-driven productivity could kick off a new long-lasting bull cycle for stocks. Yardeni even said this could be the start of the "Roaring 2020s." To comprehend how this productivity boost will translate into stock gains, we need to scrutinize profit margins and their role in stock appreciation. Over the past 30+ years, US companies have enjoyed exponential growth in profit margins. Since 1990, they've more than doubled, contributing to an over 1,100% increase in the S&P 500. However, with the ongoing economic slowdown, margins have been on a downward trend and could continue to decrease. Goldman Sachs noted that margins have declined by a full percentage point in recent quarters, and anticipates a 36-basis-point dip for full-year 2023. Now, let's loop back to AI.  According to Goldman, generative AI will potentially boost US productivity growth by about 1.5 percentage points per year over a decade. They predict that this could lead to a 4-percentage-point increase in S&P 500 net profit margins.  While the spotlight is shining brightly on AI, it is not devoid of critics. A recent research note from Bank of America termed this cohort a "baby bubble," insinuating that the bubble might burst due to tightening financial conditions. Although AI might ultimately become enormously influential in the long run, the firm also cautions that the current asset prices could deflate considerably from the current levels.  Time is the ultimate arbitrator here. Only it will tell whether the AI revolution will segregate the implementers who emerge victorious from those who are disrupted and lose. Despite the uncertainties, one thing remains undeniable - AI has the potential to be a significant driving force of the overall market in the years to come.  Trade safe!  -James  Coming Up Next: With the debt issue finally behind us, learn what are the next risks that may affect the market. Find out in the article below!   SPONSORED 🔽 Sponsored [How To Extract Profits From Uncertain Markets]( The news wants to scream “doom and gloom” about the current market. Conditions feel uncertain – that’s the prevailing sentiment. But guess what? There’s NEVER any real certainty in the market. Reveal how you can take advantage of this current market.[The #1 Strategy For Uncertain Market Conditions]( By clicking link you are subscribing to The Investing Ideas Daily Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy. [Privacy Policy/Disclosures]( Morgan Stanley Anticipates a Significant 16% Drop in US Profits That Could Halt the Market Rally Morgan Stanley strategists are going against the grain, predicting a sudden dip in corporate earnings that they believe will halt the U.S. equity rally in its tracks. This forecast goes head-to-head with the more upbeat estimates from Wall Street.  In a somewhat unexpected twist, Morgan Stanley is throwing its weight behind equities in Japan, Taiwan, and South Korea. They also suggest placing more chips on developed-market government bonds, including those long-in-the-tooth Treasuries, and the U.S. dollar. Their analysts, led by Andrew Sheets, are pointing towards a 16% drop in the S&P 500 earnings per share this year. Now, if we put that into perspective with other forecasts tracked by Bloomberg, it ranks as one of the most pessimistic. For comparison, Goldman Sachs Group Inc. is on the opposite side of the spectrum, predicting mild growth. In a recent note, Morgan Stanley strategists declared that the risk to U.S. earnings is present and immediate. They envision that a decline in liquidity could weigh down equity valuations over the next quarter. Furthermore, they expect disappointment on the horizon for EPS as revenue growth slackens and margins continue to squeeze. Morgan Stanley is expecting the S&P 500 earnings per share to land at around $185, a fair bit lower than the median prediction of $206 by other strategists. In terms of the S&P 500 level at the end of the year, they see it sitting around 3,900, a significant drop from its recent closing rate of 4,282.37. Even as the Federal Reserve is increasing interest rates and a potential recession looms, the S&P 500 seems to be riding a wave of enthusiasm for artificial-intelligence stocks. Currently, it's brushing the cusp of a bull market after a 19.7% surge from its low in October. Other propositions from Morgan Stanley strategists include a tilt towards defensive stocks, developed-market investment-grade bonds, and an appetite for additional tier-one securities—a form of subordinated bank debt—especially for those investors on the hunt for yields. However, not everyone's singing the same tune. Some strategists, such as the Evercore ISI team led by Julian Emanuel, are much more optimistic. They've amped up their year-end target for the S&P 500 by 7.2% to 4,450. Their reasoning? They believe that a probable pause by the Fed, triggered by easing inflation, along with the dollars "released during the pandemic's bleakest days" will lend support to the stock market. Morgan Stanley strategists didn't hold back on their views for other markets either. They foresee a potential 10% fall for European stocks over the next few months, though they think the downside is capped due to appealing valuations. They also predict a shift into international, cheaper value stocks from U.S. growth shares will ultimately benefit Europe. In Asia, these strategists join the recent trend of China bulls dialing back their targets for key stock indexes. They cite a delayed earnings recovery, a softer currency outlook, and geopolitical uncertainties as the key reasons for this adjustment.   Disclaimer:  The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein.  Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.  Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio.  Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. 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