Nasdaq skyrocketed last week. But the technology may be in trouble

The Google New York office on February 2, 2023.

Ed Jones | Afp | Getty Images

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The Nasdaq Composite outperformed other indices last week. But not everything is rosy in technology.

  • China wants to grow “about 5%” by 2023. That is the word of Premier Li Keqiang, who spoke at the Chinese National People’s Congress yesterday. A congressional draft budget revealed that the country will increase defense spending by 7.2% to 1.56 trillion yuan ($230 billion).
  • US equities rose on Friday as all major indices closed higher while government bond yields fell. Asia-Pacific markets were mixed on Monday. China’s Shanghai Composite fell 0.24% as investors processed the country’s modest growth target for this year.
  • Bard, Google’s artificial intelligence engine, is “not search,” Jack Krawczyk, the product lead for Bard, told Google employees. Bard’s magic is more of a “creative companion” instead. Employees told CNBC they are confused by Google’s sudden pivot.
  • PRO This week, Federal Reserve Chairman Jerome Powell will speak on the economy before Senate committees, and the February employment report will be released. Economists expect one of them to be a major market mover; the other, not so much.

Aided by the easing remarks from Fed official Raphael Bostic and a fall in Treasury yields, US stocks managed to shake off their pessimism and rallied to finish the week in the green.

The Dow Jones Industrial Average rose 1.17%, giving it a weekly gain of 1.75%, breaking its four-week losing streak. The S&P 500 gained 1.61%, up 1.9% over the week. The tech-heavy Nasdaq Composite climbed 1.97% to end the week up 2.58%. That makes two consecutive months that the Nasdaq has outperformed the other indices.

Not that everything in the tech industry is rosy. Amazon has stopped building ‘HQ2’. Meanwhile, Meta is pouring more money into the loss-making Reality Labs segment. The company slashed the cost of its virtual reality headsets — down to $500 on its more expensive Meta Quest Pro — in an effort, perhaps, to boost sales.

Things are not going well in the acclaimed domain of artificial intelligence chatbots either. Google abruptly shifted from its search-first strategy to position Bard as more of a companion to “probe your curiosity,” Krawcyzk told employees, leaving them scratching their heads.

Maybe it’s just really hard to integrate unpredictable AI chatbots with something as fact-based as web search. Think of the fiasco surrounding Microsoft’s AI chatbot Bing, which threatened users and expressed its love for them. (To Bing’s credit, that’s remarkable human behavior.)

Despite the Nasdaq’s stellar performance so far this year, it remains to be seen whether technology’s promises match reality — and translate into further gains for the index. Companies should be careful not to hesitate too long: in today’s high interest rate environment, investors don’t have as much patience as they did a few years ago.

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