Founded in 1993 by brothers Tom and David Gardner, The Motley Fool is dedicated to making the world smarter, happier, and richer. Our website, podcasts, books, newspaper column, radio show, and premium investing services are all aimed at helping millions of people achieve financial freedom. The potential for artificial intelligence (AI) to boost the global economy is estimated to reach $15. 7 trillion by 2030. While the opinions in this free article may differ from The Motley Fool's Premium Investing Services, becoming a member provides instant access to our top analyst recommendations, in-depth research, and investing resources. In recent times, the stock market has been driven by bullish sentiment and the S&P 500 and Nasdaq Composite have seen substantial gains. The performance of the Nasdaq can be attributed to the excitement surrounding AI stocks. AI involves the use of software and systems to handle tasks typically done by humans, and its incorporation of machine learning makes it a game changer with utility across various sectors.

Wall Street and analysts are well aware of the potential of AI, with PwC estimating a $15. 7 trillion impact by 2030. However, there are indicators that suggest AI stocks may face challenges in 2024. Firstly, history has shown that next-big-thing investments tend to be overestimated in the short run, and all trends need time to mature. Secondly, meeting the increasing demand and investor hype for AI can prove difficult due to capacity constraints, particularly with high-bandwidth memory (HBM) and chip on wafer on substrate (CoWoS). Lastly, the valuations of AI stocks could be problematic, as they may struggle to meet the high expectations of investors and face potential economic weaknesses. It is important to consider traditional valuation metrics in uncertain economic conditions.