The Nasdaq rose last week. But the technology may be in trouble

The Google office in New York on February 2, 2023.

Ed Jones | Afp | Getty Images

This report is from today’s CNBC Daily Open, our new international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, wherever they are. Do you like what you see? You can subscribe here.

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

  • China wants to achieve growth of “around 5%” by 2023. That’s what Premier Li Keqiang said when he spoke at China’s National People’s Congress yesterday. A budget draft at the congress revealed that the country will increase defense spending by 7.2% to 1.56 trillion yuan ($230 billion).
  • US stocks rose on Friday as all major indexes closed higher while Treasury yields fell. Asia-Pacific markets traded mixed on Monday. China’s Shanghai Composite fell 0.24% as investors digested the country’s modest growth target for this year.
  • Bard, Google’s artificial intelligence engine, is “not search,” Bard product manager Jack Krawczyk told Google employees. Bard’s magic is instead more of a “creative companion.” Employees told CNBC they are confused by Google’s sudden pivot.
  • PRO This week, Federal Reserve Chairman Jerome Powell will address the Senate committee on the economy and the February jobs report will be released. Economists expect one of them to be a major market move; the other, not so much.

Aided by Fed official Raphael Bostic’s dovish comments and a retreat in Treasury yields, US stocks managed to pull away from their pessimism and rose to end the week in the green.

The Dow Jones Industrial Average rose 1.17%, giving it a weekly gain of 1.75%, snapping its four-week losing streak. The S&P 500 rose 1.61%, up 1.9% for the week. The tech-heavy Nasdaq Composite gained 1.97% and ended the week 2.58% higher. This makes it two months in a row that the Nasdaq has outperformed the other indices.

Not that everything is rosy in the technology industry. Amazon stopped building “HQ2.” Meanwhile, Meta is throwing more money at its loss-making Reality Labs segment. The company slashed the price of its virtual reality headsets — by up to $500 on its high-end Meta Quest Pro — in an effort to perhaps boost sales.

Not all is well in the much vaunted world of artificial intelligence chatbots either. Google abruptly shifted from its search-first strategy to position Bard as more of a companion to “explore your curiosity,” Krawcyzk told employees, which left them scratching their heads.

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

Despite Nasdaq’s stellar show so far this year, it remains to be seen whether the promises of technology match reality – and translate into further gains for the index. Companies should be careful not to hang around for 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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