NEW YORK — According to Mary Callahan Erdoes, CEO at JPMorgan Asset and Wealth Management, investors should concentrate on the forthcoming opportunities associated with artificial intelligence rather than fixating on the existence of a bubble at present.
During her remarks at the CNBC Delivering Alpha conference on Thursday, Erdoes allayed concerns regarding valuation, emphasizing that AI is producing opportunities that have yet to be fully recognized or comprehended.
“I sense we are merely on the brink of many advancements,” she remarked in a panel discussion. “Currently, there exists a disparity in how AI valuations are being determined. Companies haven’t yet maximized usage. However, it mirrors the way Hemingway described bankruptcy: ‘How does one go bankrupt?’ It occurs very gradually, then suddenly, and I believe that’s precisely what will transpire with AI.”
Concerns over soaring valuations for firms such as Nvidia, AMD, and numerous others involved in the AI sector are inducing volatile fluctuations in the markets, which continue to stay near all-time highs.
On Thursday, stocks experienced a sell-off, marking their worst performance in over a month as anxieties resurfaced.
“AI itself is not a bubble. That’s an absurd notion… We stand on the verge of a significant transformation in corporate operations,” Erdoes said. “If you’re questioning whether AI is in a bubble, you must consider the specifics of your response because in the U.S., we are beginning to gain momentum, yet we are far from fully integrating it into the bottom line.”
“Explosive growth will be evident in both revenue and expenses, and the providers will need to navigate their way through the supply chain,” she continued.
Erdoes shared her perspective with support.
Michael Arougheti, CEO at Ares Management, noted that current investment levels are minimal compared to the capabilities that AI presents.
“There remains a significant gap regarding economic investment relative to the economy’s scale,” Arougheti said. “We can’t increase supply quickly enough to meet the immediate demand. Hence, I believe there’s a great deal of exaggeration because of the substantial figures involved, and it truly is revolutionary.”
Addressing broader economic concerns, Erdoes stated she does not foresee a recession in the near future.
“Analysts have predicted a recession for five years, and it simply hasn’t materialized,” she stated. On credit investments, Erdoes added, “If no recession is looming, it represents an excellent buying opportunity, and one should be proactive in making purchases.”
