Recently, while the artificial intelligence (AI) sector is booming, the actual state of the technology industry is somewhat disappointing. Many companies that have not ventured into AI are still struggling in the post-pandemic economic downturn, and it could even be said that they are "still in decline."

Investors and some analysts point out that although large companies like Nvidia and Microsoft have seen their stock prices surge due to AI, masking their poor performance last year, many companies in the industry are still struggling to recover.

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Tony Kim, the tech investment head at BlackRock, mentioned that apart from AI, other tech sectors have not seen much improvement. "Many sub-sectors are still in a recession, with AI being the only growth point," he emphasized. In fact, traditional tech areas such as software, IT consulting, and companies providing electronic devices for manufacturing and automotive industries are facing soft demand. Added to this are the over-expansion and inventory backlog during the pandemic, which have put considerable pressure on many companies. Some companies are even seeing their investment diverted due to limited customer budgets in the rise of AI.

Dustin Moskovitz, co-founder of Facebook and current CEO of Asana, also reflected on this situation. He stated in an analyst meeting that the tech industry is now experiencing the "aftermath" of over-hiring and spending in the early days of the pandemic, and the uncertainty of the economic environment has increased this difficulty. With the rise of AI, the future of the industry has become more uncertain.

According to recent financial reports, many large tech companies have seen a slowdown in growth, while the situation for smaller companies is even worse. Bloomberg data shows that the average revenue growth rate for companies in the S&P 500 Information Technology sub-index over the past 12 months was 6.9%, far below the 10% over the past five years. Among small companies in the Russell 2000 index, technology ranks second-worst in terms of revenue growth, with a 6.1% year-over-year decline in the second quarter.

Although most tech companies still hope that AI will bring a turnaround, Ted Mortonson, a tech strategist at RW Baird, points out that generative AI masks the cyclical downturn in other core areas. Investors' enthusiasm seems to be waning, and the market is beginning to look towards other sectors such as financial services and industry.

Nevertheless, some investors still believe that the industry bottom is forming, hoping for an improvement in the economic environment. Tony Wang, an investment manager at T Rowe Price, said that while AI is currently the only bright spot, he is not sure if it will continue to be so in the future.

Key Points: 

🌐 The prosperity of the AI industry masks the overall downturn in the tech sector, with many companies still struggling in decline. 

📉 Traditional tech industries face issues of weak demand and excess inventory, with a long road to recovery. 

🔄 Investors' enthusiasm for AI is waning, turning their attention to opportunities in other sectors such as financial services and industry.