Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for your money. We’re joined by John Nelson, financial planner at NelsonCorp Wealth Management. Welcome back, John.
John Nelson:
Thank you for having me, Brandy.
Brandy Auterson-Hurst:
So AI has been a pretty big buzzword in the financial world. Just how important is it to the stock market?
John Nelson:
Yes, certainly has, and I’ll say aside from all the hype, the numbers clearly back it up in terms of its importance and its growing importance here on out. The chart and graphic I have with me today just shows some of the numbers of the projected versus the current earnings per share growth for different parts of the S&P 500.
What we see here at the top are the Magnificent seven. Many of those companies reference the big, large growth in tech, predominantly companies here in the US. So when we’re seeing that, we’re looking at the numbers, the earnings growth over the next few years is what’s being illustrated here. You’re seeing these top tier groups that we have outlined in red in that 14 to 16%, annually.
You look at the broad base projected growth closer to that 12%, annually, for the S&P 500 as a whole. So clearly, the AI craze and continued push is certainly being backed up by the numbers.
Brandy Auterson-Hurst:
Okay, so what should investors take away from this?
John Nelson:
Yeah, I’d say the big takeaway is you see the concentration continuing to take place. It’s brought markets back, especially this year. A lot of growth and a lot of opportunity has certainly been in place that we like, and predominantly, the US companies, which has been great, but the more concentration we carry there, it can carry more risk. It does carry more risk that investors should be somewhat cautious about moving forward.
Brandy Auterson-Hurst:
All right, John, thanks for your insight today.
Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.
This video includes a paid appearance.