3 years of AI Mania: How ChatGPT reordered the stock market

Core Insights - The launch of ChatGPT by OpenAI has significantly influenced the stock market, particularly in the technology and AI sectors, leading to a concentration of market power among a few major companies [1][3][4] Market Leaders - The resurgence of Big Tech stocks is attributed to expectations that these companies will dominate the AI landscape, contributing to a 64% increase in the S&P 500 since ChatGPT's release [4] - The seven largest companies in the S&P 500, including Nvidia, Microsoft, and Apple, account for nearly half of the index's gains during this period [4] Rise of Nvidia - Nvidia has emerged as a key beneficiary of the AI investment boom, with its stock price increasing by 979% since ChatGPT's launch, making it the third-best performer in the S&P 500 [5] - Nvidia's revenue is projected to exceed $200 billion in 2023, a significant rise from $27 billion at the end of 2022, with net income expected to surpass $170 billion [6] Powering AI - The demand for energy to support AI infrastructure has led to substantial stock price increases for electricity providers, with Vistra Corp. rising 620% over the past three years [8][9] - Tech companies are exploring various energy sources, including nuclear power, to meet the growing energy demands associated with AI [10] AI Wipeouts - The AI boom has also resulted in significant losses for companies perceived to be at risk from AI advancements, with a UBS index of such stocks falling over 33% since ChatGPT's release [11][12] - Companies like LivePerson and Chegg have seen their stock prices plummet by 97% since November 2022, while staffing firms have also experienced declines of over 65% [12] Concentration - The rally in Big Tech has led to an unprecedented concentration in the stock market, with the top seven firms now representing about 35% of the S&P 500's market capitalization, up from approximately 20% in late 2022 [13][14] - This concentration raises concerns about potential risks to the broader market if these dominant stocks begin to struggle [14]