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.
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, Nuance Communications, NICE, iFlytek, DocuSign, Palantir Technologies, Veeva Systems, theTradeDesk, Crowdstrike, Cadence Design Systems, Xilinx, Fortinet, Synopsys, Palo Alto Networks, Service Now.
AI-INDEX 15 compared to Dow Jones, Nasdaq Composite and Dax 40 since calendar week 1/19
Jan. 26, 2022 - 01:52 PM (CET)
Due to ongoing interest rate concerns on world markets, the AI-INDEX recorded a drop in performance (-117bp) this week (CW 3) and is now quoted at 2,898 basis points. Although it thus exemplifies the sensitivity of technology-heavy stocks to fluctuating interest rates in a way equivalent to the performance of the Nasdaq technology exchange, the AI-INDEX proves to be less volatile in a head-to-head comparison. With a performance increase of 4.08 percent compared to the previous week, US-based Palo Alto Networks is by far the leading performer. The company develops and markets AI-based IT security solutions. In contrast, theTradeDesk - a California-based provider of software platforms in the digital advertising segment - recorded a double-digit performance decline of 10.56 percent compared to the previous week, thus performing the weakest. Investors' interest rate fears continue to rule the international markets, with negative sentiment prevailing among US private investors in particular. Although gains were initially achieved, profits were relinquished by the end of the trading days. Since higher interest rates devalue prospective profits of high-growth technology companies, a selloff in technology stocks occurred once again as a result, driving global markets into negative territory. Although the AI-INDEX performs weaker with a decline in performance of 3.88 percent compared to the previous week, it shows itself less sensitive to interest rate concerns in direct comparison to the technology exchange Nasdaq (Nasdaq Composite: -4.50 %; Dow Jones: -3.20 %; Dax: -1.94 %).
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.