Excitement over transformative effects of AI might already be overdone
Bitcoin, gold, the US stock market, the German stock market, even the Japanese stock market after 34 long years. Is there anything not hitting all-times? Well, there’s the tech-lite FTSE 100 index, still plodding along 500 points below its high of early last year, but it’s an outlier. The rest of the investment world is feeling the adrenalin rush of interest rate cuts in the offing and talking about the revolution in artificial intelligence. At which point, it’s worth asking whether this is all getting a bit speculative. Isn’t excitement over the transformative effects of AI, which won’t happen overnight, already overdone?
The S&P 500 index has been hitting new highs in most weeks this year and is up 27% over 12 months. As is well-known by now, by far the largest contribution has come from six of the so-called “Magnificent Seven” tech stocks – Alphabet (Google), Amazon, Apple, Meta (Facebook) Microsoft and, especially, chipmaker Nvidia. (Tesla, the other member of the group, is the laggard).