Amid AI buzz, big US tech giants add $2.4 trillion in market cap

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U.S. tech giants added $2.4 trillion to their market capitalizations in a year defined by the hype around generative artificial intelligence, according to a new report from venture capital firm Accel.

Accel, in its annual Euroscape report, said the share price values of big technology firms such as Apple, Microsoft, Alphabet, Amazon and Nvidia rose by an average of 36% year over year.

Nvidia joined the trillion-dollar club for the first time, with the U.S. chip giant now worth over $1 trillion. Nvidia’s high-performance chips power many advanced generative AI models, which produce new content from huge volumes of training data.

The world’s biggest technology companies added $2.4 trillion to their market capitalizations in 2023, according to Accel data.


Accel’s Euroscape index, which includes massive cloud and software-as-a-service (SaaS) names such as Salesforce, Palantir and Unity, rose 29% in the year to date.

The Euroscape index, which tracks several publicly-listed cloud stocks, is up 29% year-to-date, according to Accel.


Last year, the picture for cloud and SaaS was grim. Companies saw $1.6 trillion wiped off their value as investors rotated out of high-growth tech stocks, according to Accel. Now, there are signs the pressure is easing.

Faster recovery than after dotcom bust

The tech-heavy Nasdaq Composite returned to 80% of its all-time high within 18 months, according to Accel, marking a faster bounce back than than after the dotcom bust in the 1990s.

The Nasdaq recovered 80% of its all-time high within 18 months.


It took the Nasdaq around 14 years to reach that milestone, Accel said.

It took the Nasdaq Composite 14 years to recover 80% of its 2000 peak.


Public multiples for Euroscape companies are also back to a 10-year pre-Covid average of 6.1-times next-twelve-months revenue. Funding for cloud and SaaS companies in Europe, Israel and the U.S. has also reverted to pre-Covid levels.

Public SaaS and cloud company multiples have reverted back to their 10-year, pre-Covid average, according to Accel.


“We are in a very different time than 2000,” Botteri told CNBC.

“If you look back at 2000, it really took a long time … for the Nasdaq to get back to 80% of its peak. And now, after the 2021 reset, it only took 18 months to get there.”

The year of AI

AI was the primary technology driving the performance of cloud and SaaS in 2023, according to Accel — and it’s not difficult to see why.

The world has been abuzz with talk about generative AI tools like OpenAI’s ChatGPT, Google’s Bard and Anthropic’s Claude.

“Generative AI is something that is really redefining software,” Philippe Botteri, partner at Accel, told CNBC on a call Friday. 

“Any software company is leveraging generative AI, whether they’re just a startup or a new company or an existing company … You should really think about this as something that is pervasive.”

The U.S. led the way in generative AI funding deals, with the likes of OpenAI and Anthropic raising billions. OpenAI raised the biggest sum — $10 billion — and Inflection came second with $1.3 billion raised. 

The number of new unicorns created in 2023 has reverted back to pre-Covid levels — however, AI is a bright spot with a majority of the unicorns now generative AI companies.


In Europe, three of the biggest generative AI company rounds came out of France — Hugging Face ($235 million), Poolside ($126 million) and Mistral AI ($113 million).

The number of unicorn companies reverted to pre-Covid levels, with AI taking up a much greater proportion of new billion-dollar companies. In Europe and Israel, 40% of new unicorns were in generative AI; in the United States, it was 80%.

Shifting focus to profitability 

This year has been a tough one for tech, with fundraising and valuations dropping sharply as investors grew wary of the sector.

Tech companies tend to prioritize growth and expansion over short-term profits. But investors have been shifting money away from high-growth bets amid higher interest rates, which make the cost of capital more expensive.

Accordingly, the growth rates of Euroscape companies fell from an average of 68% in the first quarter of 2021 to 23% in the second quarter of 2023.

Free cash flow increased on average from -9% to +5% in the same period.

Big Tech takes a beating

This year, deal-making activity from tech giants hit a snag as regulators clamped down on those firms over concerns that they’d become too large. 

There were only 10 transactions involving a Big Tech company this year, Accel noted. That’s down sharply from prior years. In 2021, acquisitions led by FAANG (Facebook, Amazon, Apple, Netflix and Google) hit 27, and in 2022 there were 26 Big Tech deals.

The number of Big Tech-led acquisitions declined sharply in 2023 — down from 26 last year.


One deal that faced a lot of pressure from regulators was Microsoft’s blockbuster bid to acquire Activision Blizzard, the massive video game studio behind hit titles “Call of Duty,” “Candy Crush” and “Crash Bandicoot.”

The two companies finally sealed the deal last week after British regulators gave their blessing. But that was only after a protracted fight between the two parties.

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