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Nvidia joins the trillion-dollar club for the first time, with the US semiconductor giant now worth more than $1 trillion. Nvidia’s high-performance chips power many advanced generative AI models that generate new content from vast amounts of training data.
The world’s largest technology companies increased their market capitalization by $2.4 trillion in 2023, according to Accel data.
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Accel’s Euroscape index, which includes large cloud and software-as-a-service (SaaS) names such as Salesforce, Palantir and Unity, has risen 29% since the beginning of the year.
The Euroscape index, which tracks several publicly traded cloud stocks, is up 29% since the beginning of the year, according to Accel.
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The cloud and SaaS landscape was tough last year. According to Accel, companies wiped out $1.6 trillion in value as investors exited high-growth tech stocks. There are now signs that the pressure is easing.
The tech-heavy Nasdaq Composite Index returned to 80% of its all-time high within 18 months, marking a faster recovery than after the dot-com bust of the 1990s, according to Accel.
The Nasdaq recovered 80% of its all-time high within 18 months.
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It took Nasdaq about 14 years to reach that milestone, Axel said.
It took 14 years for the Nasdaq Composite Index to recover 80% of its 2000 peak.
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Euroscape companies’ public multiples are also back to 6.1x next 12-month sales, the 10-year pre-COVID-19 average. Funding for cloud and SaaS companies in Europe, Israel and the US has also returned to pre-pandemic levels.
According to Accel, multiples for public SaaS and cloud companies have returned to their pre-COVID-19 10-year averages.
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“We’re in a very different era than 2000,” Bottelli told CNBC.
“If you look back at 2000, it took a really long time for the Nasdaq to get back to 80% of its all-time high. And after the 2021 reset, it took just 18 months to get there.”
According to Accel, AI was the key technology driving cloud and SaaS performance in 2023. It’s not difficult to understand why.
The world is buzzing about generative AI tools like OpenAI’s ChatGPT, Google’s Bard, and Anthropic’s Claude.
“Generative AI is truly redefining software,” Axel partner Philippe Bottelli told CNBC on a call Friday.
“Every software company, whether it’s a start-up, a start-up, or an established company, is leveraging generative AI. We should seriously consider this as pervasive.”
The US has been at the forefront of generative AI funding deals, with companies like OpenAI and Anthropic raising billions of dollars. OpenAI raised the largest amount, his $10 billion, while Inflection raised his $1.3 billion, placing him in second place.
The number of new unicorns born in 2023 has returned to pre-COVID-19 levels, but AI is a bright spot as the majority of unicorns are now generative AI companies.
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In Europe, the three largest generative AI company rounds came from France: Hugging Face ($235 million), Poolside ($126 million), and Mistral AI ($113 million).
The number of unicorns has returned to pre-COVID-19 levels, and AI has significantly increased the share of new billion-dollar companies. In Europe and Israel, 40% of new unicorns were generated AI. In the US he was 80%.
It’s been a tough year for the tech industry, with funding and valuations plummeting as investors grew wary of the sector.
High-tech companies tend to prioritize growth and expansion over short-term profits. But as rising interest rates raise the cost of capital, investors are moving money away from high-growth investments.
Correspondingly, the growth rate of Euroscape companies declined from an average of 68% in the first quarter of 2021 to 23% in the second quarter of 2023.
Free cash flow increased from -9% to +5% on average over the same period.
Deal-making efforts by big tech companies stalled this year as regulators clamped down on the companies over concerns they were too big.
This year, Axel noted, only 10 deals involved large technology companies. This is a significant decrease compared to the previous year. In 2021, the number of acquisitions led by FAANG (Facebook, Amazon, Apple, Netflix, Google) reached 27, and in 2022 there were 26 deals related to Big Tech.
The number of Big Tech-led acquisitions fell significantly in 2023, down from 26 last year.
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One deal that came under heavy pressure from regulators was Microsoft’s acquisition of Activision Blizzard, the giant video game studio behind the hit games “Call of Duty,” “Candy Crush,” and “Crash Bandicoot.” It was a hit bid.
The two companies finally closed the deal last week, with the blessing of British regulators. But it was after a long battle between the two.
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