2023-07-15 07:14:52
July 14, 2023 Today at 09:27
Jeremy Grantham does not believe that artificial intelligence will be strong enough to prevent the current market bubble from bursting.
Jeremy Grantham says he is disturbed by the “mini-bubble” in artificial intelligence (AI) stocks. This speculative bubble specialist, who is 84 years old, is the co-founder of the management firm GMO in Boston. Some consider him a financial guru in that he correctly predicted the bursting of several bubbles in the past.
A company like Microsoft, which mentioned the words “artificial intelligence” 50 times in an earnings meeting in April, has seen its stock price jump more than 40% since the start of the year. But, this is only a small amount compared to Nvidia (+200%). This allowed the S&P 500 index to post a rise of 17% this year.
Jeremy Grantham advises investors to take their profits on big tech.
Jeremy Grantham is not at all sure that AI will be a powerful enough element to prevent the current market bubble from bursting. The AI is probably only delaying the deadline by a few months, he recently told American media.
However, it was the emergence of new technologies such as ChatGPT that prompted him to lower the probability of the bubble bursting from 85% to 70%. But the worrying factors persist in his eyes: market overvaluation, inflation, rate hikes, war in Ukraine, unstable situation in China… While calling for AI regulation, he advises investors to take their profits on “big tech”.
The explosion of what he calls the current speculative “super-bubble” would be the fourth of its kind in 100 years in the United States, this following the bubble of 1929, the internet bubble of 2000 and the real estate bubble of 2006-2008.
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