The Rational Reminder Podcast: Expected Returns of the AI Revolution
The stock market has been driven higher by the prospect of AI technologies this year. Every industry can benefit from using AI to improve operations and drive efficiency higher. Some industries are already pushing for big returns.
For investors, there’s more than just an interest in AI-related stocks. There’s also been a rise in interest in using AI to find investment opportunities. This tool could be used to beat the overall market.
This isn’t the first time that investors have been excited about AI technologies. The past few decades have seen the rise of trading programs. While not as sophisticated as ChatGPT, they’ve still been useful for finding great investment ideas.
In fact, there have been big cycles of hype over AI technologies, followed by disappointments. That’s similar to market cycles, with bull market peaks and bear market troughs.
History shows that technology changes and improves human life. But the past few decades have shown that transformative technology can lead to asset price bubbles.
The best example was the internet and tech bubble of the late 1990s. While the internet was still in its early stages, it kept growing even as internet stocks crashed in 2000.
That suggests investors should take a cautious approach to buying AI stocks. And they should look to buy into the top names during times of market pessimism.