The AI boom won't collapse like the dot-com bubble, investor Kevin O'Leary told Business Insider.
Many people, including Nobel economist Paul Krugman, fund manager Bill Smeade, and entrepreneurship professor Eric Gordon, compared the enthusiasm around AI with internet talk in the late 1990s and early 2000s.
But the investor and chairman of O'Leary Ventures' “Shark Tank” said AI “is not the same hype as the internet bubble because today you can actually look at productivity and measure it by dollar.”
O'Leary gave an example of Fly Guys, the drone company he invested in. Other businesses can scan the top of the building, provide “AI-Reaid aerial images” to identify issues and ask them to automatically create work orders.
O'Leary said that companies like Walmart and Home Depot would “save millions of dollars.”
He added that such savings from AI could offset tariff costs and support a high valuation of the stock.
Whether that is a case should be revealed in revenue over the next 12-18 months.
O'Leary believes tariffs are not a threat that many people think of.
Stocks plummeted after Trump announced tariff plans on “liberation day” in early April, but have since rebounded to highs.
This recovery shows why investors should stay in the market during a recession “even though they're hitting their nerves and biting their nails.”
The celebrity investor, self-proclaimed “Mr. Wonderful,” said it could cost money to panic or dump stocks, adding that he saw investors missed this by doing it “and over and over.”
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He added that if investors put cash out during the sale in April, they missed it. Types of returns they might expect over three years In just 88 trading sessions.
The S&P has earned around 27% from its low price on April 8th, about 12% higher than the previous level of the slump, and the market's long-term annual return rate is well above about 7%.
The bounceback reflects greater “clearness” on tariffs, O'Leary said, adding that some were “very manageable” at 10% to 15% in trade partners such as the EU. Latest prices range from 10% in the UK to 41% in Syria.
The founder of Softkey, who sold the learning company to Mattel in 1999, said he had hoped to see evidence by now if tariffs rekindle inflation or cause a recession.
The benchmark consumer price index rose on a seasonal basis, up 0.2% in April, 0.1% in May, and 0.3% in June.
He says the fear that tariffs will lead to “input costs that kill gross profits” has not yet been realized, and he believes US consumers are in good condition.
He called it “basically everyone got it wrong” and “an incredible situation.”
O'Leary said he and his business manager had loaded into stock for the busy holiday season. “We're pure bullish because it gives you some indication,” he said.
