- Explosive demand for AI has led investors to flock to AI stocks, raising fears of a bubble.
- “It’s not a bubble yet,” Siegel Russell E. Palmer, a professor of finance at the Wharton School of the University of Pennsylvania, said Monday on CNBC’s “Street Signs Asia.”
- Nvidia shares rose 24% on Thursday after the company posted better-than-expected sales and bottom line earnings in the most recent quarter.
Wharton University professor and noted economist Jeremy Siegel is bullish on the Big Tech boom fueled by artificial intelligence, despite bubble concerns.
The AI chip craze, driven by demand for AI-powered chatbots and the high-performance graphics processing units used to train such chatbots on supercomputers, has led investors to invest in certain stocks. are flooding in, with some raising concerns about a bubble.
“It’s not a bubble yet.” Siegel, Russell E. Palmer, a finance professor at the Wharton School of the University of Pennsylvania, said on CNBC’s “Street Signs Asia” Monday. He said he’s been asked if this could lead to a return to the dot-com bubble of the late 1990s.
Contrarian economist David Rosenberg predicted that the current AI boom could collapse like dot-com stocks did in the late 1990s. The dotcom bubble burst when capital dried up after the massive adoption of the Internet and the proliferation of available venture capital into Internet-based companies, especially start-ups with no track record of success.
“First, there is excitement about AI, and NVIDIA has confirmed that excitement with explosive revenue, which is a double push,” Siegel said.
Nvidia shares surged 24% on Thursday after the company posted better-than-expected revenue and bottom line earnings in the most recent quarter, hitting a record high on the back of explosive demand for Nvidia chips used in AI. Reached. The rise has pushed the chipmaker’s market capitalization to nearly $1 trillion.
Nvidia CEO Jensen Huang said on an earnings call that “demand is skyrocketing” for the company’s data center products. Nvidia shares are up 166% year-to-date.
”[In the] I would say that in the long run [Nvidia shares] It was probably slightly overrated. But in the short term, we know that momentum can drive stocks well above their underlying value, and no one can predict how far stocks will go,” Siegel said.
On Sunday, Nvidia unveiled a new class of large-memory AI supercomputers created to enable the development of huge next-generation models for generative AI language applications. Powered by the Nvidia GH200 Grace Hopper Superchip, the supercomputer is expected to offer nearly 500 times more memory than his predecessor, the Nvidia DGX A100, which was introduced in 2020.
“Generative AI, large language models, and recommender systems are the digital engines of the modern economy,” Huang said in a press release. “The DGX GH200 AI supercomputer integrates Nvidia’s cutting-edge accelerated computing and networking technologies to expand the frontiers of AI.”
Wharton’s Siegel said AI stocks have helped boost the S&P 500, which could be a “winner from the banking crisis.”
“As we all know, the gains in the S&P 500 Index are all dominated by the top 8-9 companies. The remaining 490 companies are flat or down this year. Yep. [the] The Nasdaq was oversold in 2022, and it certainly bounced back, but I think AI has pushed the big tech stocks even further,” Siegel said.
“Keep in mind that large-cap stocks of any kind, tech stocks or not, don’t need to worry about credit conditions. Yes, they certainly should worry about interest rates. will affect the ‘and medium size [companies]said Siegel.
“The S&P could actually be the winner from the banking crisis.”
