Oak Capital co-founder Howard Marks recently stated that artificial intelligence (AI) may ultimately change the world, but this alone cannot determine the success of related assets.
He said in an interview, "Every foam starts with a common belief. Everyone believes in AI, and they offer high prices for AI's beneficiary targets. Facts show that this is a bit excessive."
When it comes to artificial intelligence, Max acknowledges the transformative potential of this technology, but he himself cannot say whether the beneficiaries of AI are underestimated or overestimated. On the contrary, the AI boom reminded him of the emergence of the Internet 25 years ago, when the Internet also drove the market soaring.
"Everyone is convinced that the Internet will change the world. However, in the TMT (telecommunications, media and technology) foam at the end of the 1990s, the vast majority of Internet and e-commerce stocks that benefited from this thinking are now worthless," he said.
The billionaire investor also said, "So, I think artificial intelligence will be very important, which is the easy part to solve. But knowing how it should be reflected in the investment portfolio is the difficult part."
Meanwhile, Wall Street is working hard to address this challenge. Just last week, Goldman Sachs outlined the industries it believes will win in the long run, including semiconductor manufacturers and security software developers.
Morgan Stanley analyst Stephen Byrd said that AI is changing the landscape of data centers and mining a new infrastructure demand - power generation companies - which is a hidden investment opportunity but currently undervalued by the market. He said, "Opportunities are around infrastructure... from power generation, power electronics, data centers, and everything else - growth rates will accelerate."
Investment legend Steve Eisman is also placing heavy bets on infrastructure, hoping to get a boost from the electricity demand of artificial intelligence. He previously explained that the new GPU requires three times more power than traditional hardware. The accelerated demand for electricity will increase expenses for grid improvement and operation companies.
Given the more direct impact, Bank of America raised its target for the S&P 500 index last month and stated that AI spending is an important driving force for growth.
However, Max warns investors not to overly rely on Wall Street's predictions.
"Prices may not necessarily be correct, they are just the best level that consensus can achieve," he said.