Vanguard Warns of AI Stock Overvaluation and Potential Market Correction

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Vanguard Warns of AI Stock Overvaluation and Potential Market Correction
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Vanguard, a major asset manager, warns that the current rush into artificial intelligence stocks may overestimate the near-term impact of AI technology, increasing the risk of a market correction. Chief Economist Joe Davis suggests a cautious approach, noting the high valuations of AI-linked companies despite potential long-term benefits.

Investors have rushed into artificial intelligence (AI) stocks this year, potentially overestimating its near-term impact, according to Vanguard , the second-largest asset manager globally. Joe Davis, Vanguard ’s chief economist, warns of a potential market correction , noting that while AI could be transformative, current market valuations suggest a higher probability than what is realistically probable.

Shares of AI-linked companies have surged, with Nvidia leading the charge, but Davis cautions that these companies may not ultimately benefit the most from AI’s transformative potential

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