December 3, 2023

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Artificial intelligence fuels the next bubble

Artificial intelligence fuels the next bubble

To survive…of fuel It shows Big rise in the stock market Thanks to the AI ​​craze heading into 2023, the S&P 500 is now up 11.7% year to date, after hitting +20% over the summer. However, analysts estimate that the impressive interest in new technologies especially artificial intelligence will return in 2024 creating the next stock market bubble. Not because AI is a bubble But why do investors thirst for a new high and perhaps “fuel” it without relying on actual fundamentals and developments.

Experts largely agree that the benefits of AI will not be felt that quickly in the real economy, nor to the extent that would justify a new technology craze. However, investors are expected to try, against the backdrop of the crisis Recovery Ha Economy. Sometime in 2024, they will join what they expect will be the AI ​​train that will dominate the coming years. With this trend, a bubble will likely be created, meaning many small investors will want to follow it, getting into the game late meaning they will end up the losers.

According to ← Capital economyAI will have a similar impact on stocks as it did with the advent of the Internet in the second half of the 1990s, when the stock bubble was created “Dot com” Which exploded with a bang in 2002. From 1995 to March 2000, the Nasdaq technology index rose 800% only to lose all of its gains by October 2002.

the House estimates that this new trend will lead the S&P 500 In shallow water in 2024 and at 4,200 units, which is 2% lower than the close on Friday, September 29. But 2025 will be a year of impressive growth with the leading stock market index rising 50% during the year. Regardless of whether Economics of capital In the end, artificial intelligence has the same impact as its first stage Internet, Investors need to be more careful in this new era, as when a new trend is forming.

In the first phase of AI, which will take place in 2023, we have seen the largest technology companies benefit and attract investment interest. the apple, Microsoft, GoogleAmazon, and most importantly of all, Nvidia has seen its stock rise this year. In the short term, estimates indicate that “Service Providers” Artificial intelligence, specifically the global tech giants that have spent tens of billions of dollars partnering with it Start-ups Artificial intelligence and innovative application development such as ChatGPT, you will continue to receive the biggest boost in the stock market. However, in the future, when AI becomes ubiquitous, affecting the entire economy, more players will see their productivity increase and attract the attention of investors. If the stock market AI bubble — not the technology — bursts at some point several years down the line, it will drag into the abyss the stocks of companies that shouldn’t have invested so much in the first place.

Already from the beginning of August, and Morgan Stanley She warned that the artificial intelligence “bubble” this year is about to burst. Bank of America analysts examined 70 stock market bubbles over the past 100 years, including one Dot com And based on Digital currencies. The three-year average return for these bubbles was 154%, and according to Morgan Stanley, the big profits for US tech giants portend that… March this year It is in its final stage.