In a recent interview, Jim Thorne, chief market strategist at Wellington-Altus, discussed the impact of AI on the global economy with Quartz for their “Smart Investing” video series. Thorne predicts that AI will unleash the power of computer thought, leading to a digitized and commodified intelligence market. He compares the current stage of AI development to the early stages of companies like NVIDIA and Microsoft, highlighting the exponential rate of change that will affect investors faster than before.
Thorne explains the difference between a GPU and a CPU, emphasizing the importance of GPU-centric platforms for processing large amounts of data. He likens the current market phase for AI to estimating the total addressable market of a new drug, where fundamentals and ratings are less important as the market is still trying to figure out its value. Thorne also references economist George Akerlof’s criticism of the efficient market hypothesis in relation to betting blind on emerging technologies like AI.
Thorne acknowledges that betting blind on AI may lead to a bubble, but sees it as a normal course of business in the innovation cycle. He points out that companies like Nvidia, Dell, and Apple are not yet meeting earnings expectations beyond the current horizon, suggesting that the market has not priced in the full potential of AI. Thorne also notes the narrow breadth of the market, with a small percentage of stocks generating all the wealth, making the US a favorable investment location compared to the rest of the world.
Overall, Thorne’s insights underscore the potential of AI to revolutionize industries and markets, while cautioning investors to be mindful of the risks and uncertainties associated with betting blind on emerging technologies like AI.
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https://qz.com/nvidia-ai-stock-bubble-strategist-1851547569