AI isn’t a bubble but rather an opportunity, JPMorgan’s Erdo

• Investors should be focused on opportunities ahead with artificial intelligence rather than whether theres a bubble currently, according to Mary Callahan Erdoes, CEO at JPMorgan Asset and Wealth Management.
• Worries over skyrocketing valuations for companies such as Nvidia, AMD and a multitude of other tied to the AI trade are causing repeated gyrations in markets, which nonetheless are still hovering around record highs

• NEW YORK Investors should be focused on opportunities ahead with artificial intelligence rather than whether theres a bubble currently, according to Mary Callahan Erdoes, CEO at JPMorgan Asset and Wealth Management.

  Speaking Thursday to the CNBC Delivering Alpha conference, Erdoes dispelled worries over valuation, saying that AI is presenting opportunities not fully appreciated or understood yet.

• I feel like were just on the precipice of a lot of this stuff, she said during a panel discussion. So were in this disconnect of the world is pricing where, where AI multiples should be. The companies havent gotten it through the usage. But its very much like Hemingway said, How do you go bankrupt? It happens like very, very slowly, and then all of a sudden, and I think thats exactly whats going to happen AI.

  Worries over skyrocketing valuations for companies such asNvidia, AMD and a multitude of other tied to the AI trade are causing repeated gyrations in markets, which nonetheless are still hovering around record highs.

  Stocks sold off Thursday, registering theirworst day in more than a monthas fears once again bubble to the surface.

• AI itself is not a bubble. Thats a crazy concept. .. We are on the precipice of a major, major revolution in a way that companies operate, Erdoes said. So if you say to yourself, is AI in a bubble, I feel you have to get very granular on how youre going to answer that, because in the U.S., were starting to gain traction, but were nowhere near the ability to have the stuff all to the bottom line.

  Youre going to see explosive growth on both the revenue and the expense side, and the suppliers of it are going to have to figure out how they make their way through the pipeline, she added.

• Erdoes was not alone in her assessment.

  Michael Arougheti, CEO at Ares Management, said the level of investment now is meager compared to the potential that AI holds.

  We have a long way to go in terms of the economic investment relative to the size of the economy, Arougheti said. We cant bring the supply on fast enough to meet the near term demand. So I just feel theres a lot of hyperbole because the numbers are big and it is that revolutionary.

  Speaking on macro issues, both said they dont see a recession on the horizon.

  People have been calling for a recession now for five years, and it just hasnt come, Arougheti said.

  Speaking of credit investment, Erdoes added, If theres not a recession on the horizon, its a great buying opportunity, and you should be leaning in and buying.

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