With the utility of AI no longer up for debate, semiconductor chip companies emerge as the early beneficiaries of the ongoing ‘AI revolution.’
Technology-oriented equities gained during the recent period between Index selection dates (May 11, 2023 – June 8, 2023, the “Period”), driven by growth prospects fueled by optimistic expectations related to the ongoing ‘AI revolution.’ The narrative gained momentum after Nvidia Corp (NASD: NVDA) reported Q1 results that easily surpassed most analyst estimates, propelling the stock to new highs and making it the ninth company, and the first chipmaker, to achieve a valuation exceeding $1 trillion. Positively shifting investor sentiments overshadowed concerns about a potential US default as debt ceiling negotiations escalated between Democratic President Joe Biden and Republican House Speaker Kevin McCarthy, who together announced the framework for a resolution just before the June 5th deadline for a deal.
The BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index” or “Index”) returned 7.36% during the month of May compared to a return of 0.43% for the S&P 500 Index during the same period. Year-to-date, the BUZZ Index leads the S&P 500 with returns of 26.80% and 9.65%, respectively, as of the end of May.
Shares of Palantir Technologies Inc. Pace Advancing Stocks within the BUZZ Index
Technology-oriented shares that focus on Artificial Intelligence applications paced advancing stocks within the BUZZ Index during the recent Period. Seven of the ten top contributors to performance came from stocks that carried a full 3% maximum weight following the most recent May 2023 BUZZ Index rebalance and reconstitution, including Palantir Technologies Inc (NYSE: PLTR), NVIDIA Corp (NASD: NVDA), Tesla Inc (NASD: TSLA), Advanced Micro Devices Inc (NASD: AMD), Netflix Inc (NASD: NFLX), Meta Platforms Inc (NASD: META), and Amazon.com Inc (NASD: AMZN). PLTR’s shares demonstrated an impressive surge of 53.7% during the Period, reflecting growing investor confidence in the company’s leading position within the generative AI sector. Some market observers noted that PLTR is uniquely positioned to capitalize on its strong relationships with both government agencies, which account for 56% of its revenue, and commercial customers, which contribute the remaining 44%. Notably, PLTR’s recently introduced Artificial Intelligence Platform (AIP) empowers customers to harness the power of large language models (LLMs) on their proprietary data, seamlessly delivered through an interactive chatbot interface to enhance their user experience.
| Company |
Ticker |
Average Weight (%) |
Return Contribution (%) |
| Palantir Technologies Inc |
PLTR |
3.54 |
1.53 |
| NVIDIA Corp |
NVDA |
3.53 |
1.10 |
| Tesla Inc |
TSLA |
3.14 |
1.07 |
| Advanced Micro Devices Inc |
AMD |
3.37 |
0.79 |
| Netflix Inc |
NFLX |
2.75 |
0.45 |
| Charles Schwab Corp/The |
SCHW |
2.76 |
0.42 |
| Meta Platforms Inc |
META |
3.16 |
0.39 |
| Amazon.com Inc |
AMZN |
3.11 |
0.34 |
| Enphase Energy Inc |
ENPH |
2.39 |
0.33 |
| Carnival Corp |
CCL |
1.21 |
0.31 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
The top detractors to performance were led by Lucid Group Inc (NASD LCID), whose shares fell 11% during the Period. The maker of luxury electric vehicles announced plans for a public stock offering and a separate private placement to raise about $3.0 billion in gross proceeds. Shares of LCID were down over 8% on a year-to-date basis as of the selection date for the June BUZZ Index rebalance and reconstitution, a stark contrast to rival TSLA, whose shares have gained over 90% during the same period.
| Company |
Ticker |
Average Weight (%) |
Return Contribution (%) |
| Lucid Group Inc |
LCID |
2.69 |
-0.34 |
| Agilent Technologies Inc |
A |
1.75 |
-0.29 |
| Coinbase Global Inc |
COIN |
2.73 |
-0.26 |
| Shopify Inc |
SHOP |
1.51 |
-0.09 |
| AT&T Inc |
T |
0.77 |
-0.05 |
| SoFi Technologies Inc |
SOFI |
0.64 |
-0.04 |
| Verizon Communications Inc |
VZ |
0.45 |
-0.04 |
| First Solar Inc |
FSLR |
0.33 |
-0.03 |
| Starbucks Corp |
SBUX |
0.55 |
-0.03 |
| Visa Inc |
V |
0.67 |
-0.03 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
Sentiment Stock Highlight – Target Corp
Target Corp (NYSE: TGT) has been at the center of a socio-political controversy in recent weeks, with a clash between left and right-wing ideologies on full display. The retailer, a long-time celebrater of Pride month, rolled out its collection of Pride-themed merchandise across its stores in the US earlier in May. This year’s rollout was met with strong opposition, particularly in areas that lean right-wing conservative, with incidents of employees feeling threatened by customer complaints. In response, Target pulled certain products and relocated others to stores’ backs, prompting backlash from left-wing advocate groups. The stock has been punished amid the controversy, declining more than 20% over the past month. On the other hand, sentiment on the stock has jumped significantly as investors appear to be looking past the publicity generated from the incident with a view that the stock may recover once the controversy subsides. This month, TGT re-enters the BUZZ Index with a maximum of 3% weight.
Target Inc Stock Price | January 2017 – June 2023
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
BUZZ Index June 2023 Rebalance Highlights
Semiconductor Companies
Recently, the hottest narrative in the markets has been the emergence of Artificial Intelligence (AI). Like the Blockchain craze in recent years, the hype around the new technology has led to a surge in AI-related stocks. However, unlike Blockchain, AI has either been already integrated or is close to being deployed in the products of the tech industry’s largest companies. Within months of OpenAI releasing ChatGPT to the world, many companies have already begun building it into mainstream applications and software. Alphabet (NASD: GOOGL) even released its own version, Google Bard. With more real-life applications constantly being discovered and transformed, the utility of AI is no longer up for debate. Chip manufacturers such as NVIDIA (NASD: NVDA) and Advanced Micro Devices (NASD: AMD) have been the biggest beneficiaries, with NVDA establishing itself at the forefront of delivering AI-specific chips. Shares of NVDA have erased all of their 2022 losses and are making new all-time highs. Broadcom (NASD: AVGO) and Marvell Technology (NASD: MRVL), two lesser-discussed semiconductors producers, have also greatly benefited. This month, both AVGO and MRVL are among the top new entrants in the BUZZ Index, with each entering at a 1.33% weight.
For more on rebalancing results and a full breakdown of index constituents added and removed for the month, view the BUZZ Index reconstitution report.
Originally published by VanEck on June 28, 2023.
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