July 10, 2024, 12:25 a.m.
2002

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Brief news summary

The hype surrounding AI has created a concentrated market bubble that resembles the dot-com era, warns James Ferguson, a founding partner of macroeconomic research firm MacroStrategy Partnership. He argues that the tendency of large language models to invent facts and sources may be more problematic than anticipated, making AI less viable. Ferguson also highlights the cost-effectiveness of AI, noting that it could become too energy-hungry for many businesses. He compares the excessive tech hype to the dot-com crash and questions the overvaluation of AI-linked tech stocks like Nvidia. However, he suggests that there is still value in US small-cap stocks after the AI bubble bursts.

The hype surrounding AI is hard to ignore, with promises of personal robot assistants and medical breakthroughs. However, not everyone is impressed. James Ferguson, from MacroStrategy Partnership, believes that the enthusiasm for AI has created a concentrated market bubble similar to the dot-com era. He argues that AI is unproven and unreliable, with hallucinations being a bigger problem than expected. In addition, AI may be too energy-hungry to be cost-effective.

Ferguson warns that the excessive hype and questionable promises are similar to the time before the dot-com crash. He suggests that investors should be cautious, as stocks may be overvalued. Though he admits that it's difficult to predict when a bubble will burst, Ferguson recommends exploring currently undervalued U. S. small-cap stocks as a potential alternative.


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