Famed tech investor Cathie Wood has warned that the fenzy around artificial intelligence (AI) that has boosted US tech stocks could leave investors scorched.
Wood said that the current market concentration around US tech giants, including Nvidia, Apple, Microsoft, Amazon, Alphabet, Tesla and Meta, has hit levels not seen since the Great Depression in the 1930s.
The heavy focus on these tech giants is “taking up so much oxygen from the investment room” and poses a risk, she said, according to a report by The Sunday Telegraph.
“History books will be written about this. Investors are concerned about this concentration and the risk that the concentration is introducing into their own system,” added Wood, who heads up American tech investment firm ARK.
It comes amid growing concerns over the sustainability of stock gains among the so-called Magnificent seven.
Last week, hedge fund Elliott Management expressed scepticism over the technology’s ability to deliver on its productivity promises. It said AI is “overhyped with many applications not ready for prime time” and warned that star stock Nvidia was in “bubble land”.
Many of the uses for AI are “never going to be cost-efficient, are never going to actually work right, will take up too much energy, or will prove to be untrustworthy”, the hedge fund explained.
Wood argued that better investment opportunities exist beyond the US tech giants, and predicted that AI’s benefits will spread more broadly across the market.