Asset manager’s chief economist Joe Davis says investors are overplaying the near-term potential of the technology
Investors’ rush into artificial intelligence stocks this year has overplayed the near-term potential of the technology, raising the risks of a “correction” in share prices, asset management powerhouse Vanguard has warned. Joe Davis, Vanguard’s chief economist, said investors have gone too far in their bets on AI’s potential, even if the technology proves to have similar effects to the personal computer, whose adoption since the 1980s revolutionised productivity and jobs.
“From an economic perspective we’re roughly in the year 1992 but from the market valuation perspective, I can make the argument that we’re in 1997,” he added. Soaring shares of AI-linked groups have been key drivers of a wider rally in Wall Street stocks, which has led the broad S&P 500 index up 27 per cent this year. Nvidia, which makes chips that are essential for AI, has driven roughly a fifth of the S&P 500’s gains, jumping more than 180 per cent.
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