What is the "Tech Rally" and why does it matter for investors?

The "Tech Rally" refers to the recent surge in technology stock prices, particularly among mega-cap companies like the "Magnificent Seven" (Apple, Microsoft, Google, Amazon, Nvidia, Meta, and Tesla). This rally has been largely driven by optimism around artificial intelligence advancements. It matters for investors because it's creating growth opportunities not just in these large companies, but also in the smaller firms that provide the essential technology, components, and services that make AI development possible.

What are the "picks and shovels" of the AI gold rush?

This refers to the companies that provide the essential tools, components, and infrastructure needed for AI development, rather than being the end providers of AI services themselves. Just as the most reliable profits during the gold rush often went to those selling mining equipment rather than the miners themselves, these companies supply the critical hardware (semiconductors, servers), software platforms, and security solutions that enable AI advancement. They can benefit regardless of which specific AI applications ultimately succeed.

What are semiconductors and why are they important for AI?

Semiconductors are materials (typically silicon) that can conduct electricity under some conditions but not others, making them ideal for controlling electrical signals. They're used to make computer chips and processors, which are the "brains" of all computing devices. For AI development, specialized semiconductors like GPUs (Graphics Processing Units) and custom AI chips are crucial because AI requires enormous computing power for processing and analyzing massive datasets. Companies that design and manufacture these chips are foundational to the entire AI ecosystem.

What is cloud computing and how does it relate to the tech rally?

Cloud computing is the delivery of computing services over the internet ("the cloud") rather than through local servers or personal devices. These services include servers, storage, databases, software, and processing power. The tech rally is closely tied to cloud computing because AI development requires massive computing resources that are most efficiently delivered through cloud platforms. As companies race to develop AI capabilities, they're significantly increasing their spending on cloud infrastructure and services, benefiting both the major cloud providers and companies that supply technologies to build and secure cloud environments.

What is cyber security and why is it included in this stock group?

Cybersecurity involves protecting computer systems, networks, and data from digital attacks or unauthorized access. It's included in this stock group because as AI and cloud computing expand rapidly, the need for robust security increases proportionally. Companies are storing more sensitive data and running more critical operations in cloud environments, creating greater security risks. Additionally, AI systems themselves need protection from tampering or data theft. Cybersecurity companies are therefore essential partners in the AI-driven tech expansion, experiencing growing demand as the digital infrastructure expands.

17 handpicked stocks

Riding the Tech Rally

These carefully selected companies form the backbone of today's AI-driven tech boom. From semiconductors to cloud services, these stocks represent the picks and shovels powering the digital gold rush as mega-cap tech giants expand.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 30