AI Frenzy Highlights Global Race for Chip DominanceAIFrenzyHighlightsGlobalRaceforChipDominance

Investor optimism around artificial intelligence and the Federal Reserve nearing the end of its rate-hike campaign has underpinned a resilient year for risk assets. AI’s impact has been particularly evident, with mega-cap tech companies contributing nearly all of the S&P 500’s gains in 2023. Advancements in generative AI, made popular by the public launch of ChatGPT, are viewed by market participants as a significant boost to companies that not only develop the technology itself, but help build the infrastructure that makes it possible. Chip makers in particular have entered the AI spotlight.

For decades, oil has been the fuel that keeps the world’s economic engine running. More recently, the microchip has emerged as a new critical component. Everything from satellites to toasters are powered by chips, making the semiconductor industry a linchpin of both the economy and national security. Recent chip shortages revealed a new vulnerability that businesses and policymakers are scrambling to address, setting off a global race to build up production and fortify supplies. The latest episode of The OUTThinking Investor examines the global competition to win the battle for chip dominance, from geopolitics to macroeconomic implications for investors.