A.I. buzz has had quite the year so far, and equities investors have subsequently rewarded the companies that have made headlines for integrating generative A.I.—like Microsoft and Meta, which are up 35% and 111% respectively year to date. The chipmakers powering A.I. have also seen a boost from the excitement—the most prominent being Nvidia, which is up 162% this year so far.
Yet is the hype overblown and pushing these stocks higher than they should be? Investor Stanley Druckenmiller, the billionaire CEO of the Duquesne Family Office, said at Bloomberg’s Invest Conference on June 7 in New York City that he plans to hold Nvidia. “If I’m right about A.I., I could own Nvidia for two or three more years,” he said.
Dawn Fitzpatrick, CEO and chief investment officer of Soros Fund Management, explained she sees much of the hype about A.I. priced into stock prices already at Bloomberg’s conference. “The real beneficiaries are the applications…your cloud and and your high-performing chip companies. Those stocks right now are extrapolating pretty enormous compounding growth—we wouldn’t necessarily chase that,” she said. Yet she also said the tech would promote dramatic growth across sectors. “The capabilities are just going to be exponential,” she added.
Other investors are wary of the frenzy about some of A.I.’s most anticipated applications, like helping pick stocks for example. Cofounder of quantitative hedge fund firm Two Sigma Investments David Siegel said he sees current generative A.I. as a logical extension of computing tech advancements. “I’ve never seen anything quite like [the hype], Chat GPT really captured people’s imagination in a way that surprised absolutely everyone,” said Siegel at the conference. “I see this as a progression and it’s extremely exciting, but I’m not actually buying into the hype to the extent.”
Marty Chavez, vice chairman and partner at Sixth Street, held a similar view: “It’s just software,” he said at the conference. “I do not see A.I. achieving what some would call the Holy Grail. Everybody wants to know, ‘What’s the S&P [500] going to be in six months,’ and I can’t tell you, and neither can the A.I.,” he explained.
Overall, investors emphasized that A.I. will bring huge growth and profit to those who get it right, yet it’s too early to know which companies will prevail, and how many players will compete for market share. Yet many expressed optimism about the tech, despite high-profile pleas to heavily consider risks of building the technology. “I’m extremely excited. I think that this is a the greatest revolution—bigger than the internet revolution,” said famed investor Ray Dalio, who founded Bridgewater Associates.
