As a wealth management and investment advisory firm, we at Pathstone are often asked about the latest developments in technology. Investors, particularly entrepreneurs, are often interested in “hot” trends. It is part of our ongoing investment research efforts to stay abreast of market-moving developments, and more important, to help ensure clients approach new opportunities with clarity.

Artificial intelligence (AI) is a case in point. In looking at the drivers of U.S. stock market returns in 2023, we see that much of this performance has been driven by excitement around the potential for advancements in artificial intelligence (AI) technology. Seven technology- and AI-related stocks drove all of the S&P 500’s rally this year through May, with the rest of the index averaging a negative return.

Are the advancements in AI the catalyst for a new bull market or is the excitement overdone? We believe investors would be wise to remember lessons from past technology cycles, and rather than chase speculation, invest with a long-term mindset, partnering with managers that have a strong technical understanding of these advancements and their implications.

In May, US Large Cap stocks were propelled higher on AI news and a debt ceiling deal being struck. The S&P 500 was up +0.4% and Nasdaq was up nearly +6% MoM. Growth stocks, including tech, telecom, and consumer discretionary, continued their YTD outperformance. Developed ex-US Large Cap stocks fell -4.1%, but are still up over +7% YTD. Inflation has slowed marginally, but recent readings remain elevated. Payrolls were unexpectedly high, with 339,000 jobs created, but the unemployment rate rose to 3.7%. The Household Survey revealed a rise in joblessness.

Please enjoy an in-depth discussion on getting comfortable with Private Investing as our panelists tackle the common questions about Private Investments: