Artificial Intelligence a powerful investment theme for 2023 in technology :

AI is becoming real with new service launches expected in 2023 from Microsoft and Google. This has created excitement and at times share price over-reaction. This seems to be the case with NVDIA the leading supplier of GPU (Graphic Process Unit) often referred to as the main “pick and shovel” play on AI. Shares are up 81% year to date and trade on a rather demanding 89x EVEBITDA. Other bigger names have started to move: Google rallied 10% in the past month. Both Google and Microsoft have developed in-house hardware and GPU that could compete eventually with NVDIA offering. AMD a smaller competitor of NVDIA trades on more reasonable valuation. Apple has been very secretive but with more than one billion terminals will have some skin in the game. Zuckerberg has pivoted from Metaverse to Artificial Intelligence. Meta is building AI-powered tools for WhatsApp, Instagram and Messenger. It is still early stage, but it seems AI is about to disrupt the current tech equilibrium and to be a powerful theme in the technology sector.

SAP back to its core business:

Silverlake and CPPIB (Canadian pension fund) are buying Qualtrics for $ 12.5 billions valuating the SAP stake in Qualtrics at $ 7.7 billions. Qualtrics was one of the many acquisitions made by the previous SAP management team back in 2018.

This sale underlines the focus of SAP new management team on the core business and will give them flexibility for potential return of cash to shareholders (this amount accounts for 8% of SAP market cap). After a period of frantic acquisitions under the previous management team, it is the confirmation of a more disciplined strategy from SAP.