Technical corrections almost always happen during the second year of bull markets, but that’s normal and healthy. You should still focus on buying large tech names.

The bullish trajectory that ensued following the October 2023 low has been formidable, propelling valuations to elevated levels. However, seasoned investors recognize that unbridled rallies warrant caution, as historical precedents suggest.

In such junctures, prudence dictates a measured approach, acknowledging the potential for short-term volatility while remaining anchored to long-term investment objectives.

Yet, amidst this caution, a beacon of hope emerges in the form of robust earnings performance. This unexpected strength underscores the resilience of the market and offers reassurance to investors navigating uncertain terrain.

Despite recent corrections, the trajectory of major market indices remains upward-bound, underscoring the resilience of the ongoing bull market. Notably, the Nasdaq's 5.1% surge and the S&P 500's 4.6% gain reflect sustained investor optimism.

Equally noteworthy is the Dow's remarkable streak, poised to clinch its fourth consecutive winning month—a feat not witnessed since May 2021. This resilience underscores the underlying strength of the market, affirming investors' confidence in its trajectory.

As the market embarks on another month of potential gains, investors are reminded of the wisdom in maintaining a diversified portfolio and a long-term perspective. While short-term fluctuations may rattle confidence, steadfast adherence to investment principles ensures steady progress toward financial objectives.

On the Fed side, traders still largely expect the central bank to hold its benchmark overnight borrowing rate steady when it next meets in March, then cut in May, to be followed by four more quarter percentage point reductions by the end of the year, according to CME Group projections.

Microsoft: Billions of advertising opportunity

Advertising has emerged as a burgeoning avenue for growth within Microsoft's expansive portfolio, presenting the potential to inject tens of billions of dollars into the company's revenue stream. In recent times, Microsoft's advertising business has garnered increased attention, fuelled by strategic initiatives and external market dynamics.

One pivotal factor propelling Microsoft's foray into advertising is the company's innovative integration of generative AI features into its search offering. This transformative technology not only enhances the user experience but also augments the efficacy of advertising campaigns. By leveraging advanced AI algorithms, Microsoft can deliver more personalized and targeted advertisements, thereby maximizing engagement and driving higher conversion rates for advertisers. This sophisticated approach positions Microsoft as a formidable competitor in the digital advertising landscape, poised to capture a larger share of the market.

Moreover, Microsoft's diverse ecosystem of products and services provides a fertile ground for advertising opportunities. From its flagship operating system, Windows, to its cloud computing platform, Azure, and its suite of productivity tools, including Office 365 and LinkedIn, Microsoft boasts an extensive network of touchpoints through which advertisers can engage with consumers. By harnessing the power of data analytics and machine learning, Microsoft can deliver targeted advertisements tailored to the preferences and behaviours of individual users, thereby enhancing the effectiveness of advertising campaigns and driving tangible results for advertisers.

Looking ahead, the potential for Microsoft's advertising business to contribute tens of billions of dollars in revenue represents a compelling growth opportunity for the company. As consumer behaviour continues to evolve in the digital age, the demand for innovative advertising solutions that deliver personalized experiences will only continue to grow. With its technological prowess, expansive reach, and commitment to driving value for advertisers, Microsoft is well-positioned to capitalize on this trend and emerge as a dominant player in the global advertising ecosystem.

Apple: Giving up EV may not be a bad news

Recent developments suggest that Apple may be pivoting away from its electric car project to double down on investments in artificial intelligence. While the electric car endeavour was once touted as a potential game-changer for the tech giant, recent rumors and industry chatter point to a strategic shift towards AI-driven innovations.

Apple CEO Tim Cook is rumoured to unveil a groundbreaking new processor in the upcoming iPhone 16, specifically engineered to bolster the device's AI capabilities. This new processor is poised to revolutionize the way users interact with their iPhones, ushering in a new era of seamless integration between hardware and AI-powered software. With enhanced processing power and AI algorithms, users can expect faster performance, improved battery life, and a host of innovative features that harness the power of machine learning.

In addition to hardware advancements, Apple is rumoured to introduce new AI features in its iOS 18 operating system. These enhancements are expected to elevate the user experience by leveraging AI to deliver personalized insights and recommendations. Among the anticipated updates are advancements to "Siri," Apple's virtual assistant, which will be equipped with new capabilities to provide more intuitive and contextually relevant responses to user queries. Furthermore, enhancements to "Messages" are on the horizon, enabling users to benefit from AI-powered summaries of incoming texts, streamlining communication and enhancing productivity.

Beyond incremental improvements, Apple is rumoured to be exploring the development of a large language model (LLM) feature, akin to OpenAI's GPT-3, within iOS 18. This ambitious undertaking aims to democratize access to advanced AI capabilities, empowering developers and users alike to leverage cutting-edge natural language processing (NLP) technology. By integrating LLM functionality into its operating system, Apple seeks to redefine the boundaries of what is possible in terms of human-computer interaction, enabling users to accomplish tasks with unprecedented ease and efficiency.

The decision to prioritize AI over the electric car project underscores Apple's commitment to innovation and its strategic focus on emerging technologies with transformative potential. While the electric car project may have held promise, the allure of AI-driven solutions has proven irresistible, offering a broader scope for disruption and market impact.

Nvidia: Watch the next catalyst

The upcoming global artificial intelligence conference slated for March 18th stands poised to serve as a pivotal catalyst for Nvidia, propelling the tech giant to new heights in the realm of AI innovation and technology leadership. As anticipation mounts for this highly anticipated event, industry analysts and enthusiasts alike are eagerly awaiting insights into Nvidia's latest advancements, strategic initiatives, and future roadmap in the burgeoning field of artificial intelligence .

At the forefront of Nvidia's agenda is its unwavering commitment to driving innovation in the data centre segment. With the explosive growth of AI applications and the ever-increasing demand for computational power, Nvidia has emerged as a trailblazer in providing cutting-edge solutions that empower organizations to harness the full potential of AI. From advanced data processing and analytics to machine learning and deep learning algorithms, Nvidia's data centre solutions continue to set the industry standard, enabling enterprises to unlock new insights, drive operational efficiencies, and gain a competitive edge in today's data-driven economy.

Furthermore, Nvidia's gaming division remains a formidable force in the industry, with the ongoing upcycle demonstrating robust momentum and sustained growth. Bolstered by a diverse portfolio of high-performance graphics processing units (GPUs) and innovative gaming technologies, Nvidia continues to captivate gamers worldwide, delivering unparalleled immersive experiences and pushing the boundaries of gaming realism. As the gaming landscape continues to evolve with the emergence of cloud gaming, virtual reality (VR), and augmented reality (AR), Nvidia remains at the forefront of innovation, driving the next wave of gaming innovation and shaping the future of interactive entertainment.

Against this backdrop, the global artificial intelligence conference represents a unique opportunity for Nvidia to showcase its latest breakthroughs, unveil new product offerings, and engage with key stakeholders across the AI ecosystem. From industry-leading researchers and developers to enterprise customers and technology partners, the conference serves as a dynamic platform for knowledge exchange, collaboration, and thought leadership in the rapidly evolving field of AI.

Looking ahead, Nvidia is well-positioned to capitalize on the transformative power of AI, leveraging its unparalleled expertise in GPU-accelerated computing to drive innovation across a diverse range of industries and applications. With a relentless focus on pushing the boundaries of what's possible, Nvidia is poised to lead the charge in shaping the future of AI-driven computing, empowering organizations and individuals alike to achieve new levels of productivity, creativity, and success in the digital age.

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Fullerton Markets Research Team

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