AI will move into every industry. It will radically reduce costs, replace 40 percent of conventional jobs and destroy business models in the long term. AI will have a similar revolutionary effect as the invention of electricity - but it will enter our lives much faster.
Artificial intelligence (AI) is a branch of computer science that deals with the automation
of intelligent behavior and machine learning based on digital data.
The possibility of machine learning opens a very large spectrum for potential fields of application of artificial intelligence, which are conceivable in almost all areas of life. More and more companies are recognizing this aspect, with the result that the market has grown dynamically over the last few years and, according to forecasts, will continue to grow. A distinction is made between two types of companies:
Companies that include the use of AI in their value creation in order to use efficiency and productivity increases with the aim of better serving their customers and creating added value relevant to competition, and
companies that deal with the development of AI products/processes at the core of their value creation and thus represent the real hidden champions. AI companies that follow this definition are already significantly better valued on the stock exchange than classic companies and show an increased growth of their market capitalization compared to classic companies.
Against this background, the AI-INDEX comprises 15 high-growth companies, weighted by their market capitalization and for comparison with other indices collectively normalized to 1.000 points on the start date (1/2019), whose value creation is based on the creation of AI products and processes.
„In the coming years, artificial intelligence will begin its journey advance. Why? Because after Big Data, Big Intelligence comes to evaluate the flood of data! Only AI systems can help companies to filter out the market trends and business potential from the abundance of more or less structured data volumes that will be at the heart of digital business.“
The AI-INDEX 15 currently comprises 15 companies that design, create, integrate or provide artificial intelligence (AI) in the form of products, software or systems. This distinguishes them from other tech companies that "just use" AI but do not regard it as the core of their value creation and their products or services.
Weighted by their market capitalization, the following stocks are currently included in the AI-INDEX: Dynatrace, DocuSign, iFlytek, Palantir Technologies, Veeva Systems, Ansys, theTradeDesk, CrowdStrike, Fortinet, NICE Ltd. Cadence Design Systems, Synopsys, Palo Alto Networks, ServiceNow
AI-INDEX 15 compared to Dow Jones, Nasdaq Composite and Dax 40 since calendar week 1/19
Dec. 20, 2024 - 02:40 PM (CET)
The AI-INDEX is down this week (week 51) and is trading at 5,500 basis points with a loss of 214 bips. Palantir Technologies is the best performer with a price gain of 1.4%. The US company based in Denver develops software that helps companies to effectively integrate their data, decisions and processes. With a price gain of 6.7%, NICE Ltd. is the lowest performer this week. The Israeli company based in Ra'anana offers CXone, an open cloud platform that enables companies to manage the complexity of the modern customer experience on one platform. Following the US Federal Reserve's last interest rate decision of the year, the New York stock markets came under pressure. Although the expected 0.25 percent cut in the key interest rate was in line with forecasts, the reduced prospects of only two further rate cuts in the coming year caused disappointment among investors. Technology stocks on the Nasdaq in particular, which had previously soared impressively, were weighed down by profit-taking. The prospect of a pause in interest rates also weighed on sentiment in the German stock market. The AI-INDEX fell by 3.7 percent this week (Nasdaq Composite: -2.7%; Dow Jones: -3.6%; Dax: -2.2%).
In 2023, the coronavirus pandemic came to an end after three years and the markets had the chance to recover, almost skyrocketing. Investors were more optimistic than ever before, which was reflected on the stock markets by the record prices of the AI index and other indices such as the Dow Jones; in the technology sector in particular, this optimism can be attributed to AIs such as ChatGpt. These have found their way into everyday life and have already been integrated into many conventional programs, making the potential of AI tangible for many for the first time. Starting at 2165.03 basis points (2023, week 1), the price of the AI-INDEX rose to 3855.80 basis points by the end of the year (2023, week 52). With an increase of 192.78% since the beginning of the year, Palantir Technologies has shown the best performance. The core business of the US technology company is the analysis of large amounts of data (big data) for companies and governments. CrowdStrike, the provider of cloud solutions for the protection of end devices and cloud workloads (software-as-a-service), also posted a similar annual performance, gaining 180.66%. In contrast, NICE brings up the rear of the AI index with an annual increase of 6.71%. The company's main focus is on contact center software and artificial intelligence. Overall, the AI INDEX rose by 1690.77 basis points in 2023, which corresponds to growth of 78.09% since the beginning of the year (Nasdaq Composite: 46.25%; Dow Jones Industrial: 13.69%; Dax: 15.83%). The AI Index has outperformed every benchmark index this year.
The year 2022 was dominated by the Russian war against Ukraine and the related energy crisis in Europe. The economic recovery from the economic collapse caused by the Covid 19 pandemic also caused energy prices to rise. The subsequent rise in the inflation rate resulted in key interest rate increases by, for example, the European Central Bank and the Federal Reserve. These rate hikes affected tech stocks in particular, which rely on venture capital. Starting at 3192.17 basis points (2022, week 1), the AI-INDEX drops to 2235.33 basis points by the end of the year (2022, week52). With a year-to-date decline of 7.42 percent, Cadence Design Systems shows the best performance. The U.S. technology company is one of the largest providers of electronic design automation (EDA) software. Synopsys (provider of design-for-manufacturing solutions) also shows a similar year-to-date performance with a decline of 7.78 percent. In contrast, Palantir Technologies has to accept the largest minus with an annual decline of 61.85 percent. The U.S. company specializes in the analysis of large amounts of data (Big Data). Overall, the AI-INDEX has fallen by 956.84 basis points in 2022, which corresponds to a year-to-date decline of 29.97 percent (Nasdaq Composite: -31.24%; Dow Jones Industrial: -8.53%; Dax: -12.80%).
Even though 2021 was marked by both ups and downs in both economic and social terms, in retrospect it was a winning year for the AI-INDEX, with solid growth in value. Starting at 3,001 basis points (2021, CW 1), the AI-INDEX was able to end the year on a high note by achieving a solid performance of over 3,483 basis points (2021, CW 52). With an annual performance of 48.68 percent, the U.S. technology company Dynatrace recorded the strongest performance in 2021. Additionally, both Xilinx (manufacturer of programmable logic circuits) and Synopsys (provider of design-for-manufacturing solutions) also showed a strong annual performance with 44.51 percent and 44.03 percent, respectively. In contrast, the U.S. cloud software company Splunk recorded the weakest annual performance with a decline of 28.87 percent. Although Splunk still had a slightly positive annual performance at the beginning of the fourth quarter, the company recorded significant declines in performance after the announcement of CEO Doug Merritt's exit (2021, week 46). Overall, the AI-INDEX increased by 482 basis points in 2021, corresponding to an annual performance of 16.08 percent (Nasdaq Composite: 20.46 %; Dow Jones Industrial: 17.26 %; DAX: 13.72 %). In calendar week 45, the AI-INDEX marked a new annual high of 3,761 basis points, which corresponded to an annual performance of 25.33% at that time. Although this peak could not be maintained until the end of the year, the index comparison in particular illustrates the lead of AI companies on the stock market due to the potential of AI-based business models: AI-INDEX: 3,483 bp; Nasdaq Composite: 2,336 bp; Dow Jones Industrial: 1,553 bp; DAX: 1,475 bp.
Overall, 2020 was a year of growth for the AI-INDEX. Starting at 1,627 basis points (2020, CW 1), the AI-INDEX was able to end the year on a very high note with a strong performance of over 3,002 basis points (2020, CW 53).
With an annual performance of 332.2 percent, the U.S. cybersecurity company CrowdStrike shows the best performance in 2020, while theTradeDesk (online marketing) with 208.2 percent and Five9 (provider of contact center software in the cloud area) with 175.1 percent also displayed strong annual performance. With an increase of 3.3 percent, the Canadian technology company OpenText suffered the weakest annual performance. As a result, however, no company in the AI-INDEX recorded a negative annual performance.
The AI-INDEX has increased by 1,375 basis points in 2020, which corresponds to an annual performance of 84.5 percent (Nasdaq Composite: 42.4%; Dow Jones Industrial: 5.9%; DAX: 3.8%). In calendar week 52, the AI-INDEX reached its highest level to date of 3,113 basis points, which corresponded to an annual performance of 91.4 percent at that time.
Above all, the index comparison illustrates the large lead of AI companies on the stock market: AI-INDEX: 3,002 bp; Nasdaq Composite: 1,906 bp; Dow Jones Industrial: 1,293 bp; DAX: 1,274 bp.
„Artificial intelligence is one of the big technologies of our future. Germany and the EU must become an attractive AI location for entrepreneurs, where risk-taking is appreciated and innovative spirit meets the best conditions.“
