The transformative potential of AI and its associated technologies across various industries has been highlighted by the banking mogul, Morgan Stanley, in a recent research report. A profound digital alteration at an industrial level is projected by the investment giants as one of the primary secular investment themes for the decade to come.
Recent astronomical growth in the tech field put forth the question if we’re perhaps treading within a bubbling market. The report, however, concluded that the history of pre-peak bubble returns doesn’t match the continuous victory run of the AI index. This observation strengthens the fact that secular investment trends are programs of a long run and do not hop with market cycles.
Now, pinpointing the peak of this reportedly bullish AI-led market rush can be challenging. Hence, the study pegs the initiation from the launch of renowned language model, ChatGPT, aligning the fitting frame from December. Historical patterns show that typical investment bubbles tend to surge about 154% medianly, or an average of 217% in the three years before hitting the top.
But if we consider the gains of AI leaders such as the popular graphics-chip maker, Nvidia, they tower high with a 200%+ growth this year alone. Contrarily, a wider glimpse shows the AI indices scoring only around a 50% upswing, nothing astounding above the previous highs in 2021.
The extensive range of AI’s diffusion and its ‘stickiness’, or potential to retain users’ attention, is what separates AI from earlier, transient waves of hype, thereby strengthening its prospects. Goldman Sachs, another Wall Street powerhouse, chimes in by predicting that the broad adoption of AI will be poised to make notable impacts on the US economy between 2025 and 2030.
Although the AI revolution promises impressive economic markers and massive advancement, it’s prudent to cautiously navigate this bullish trend. The disparity in growth among specific companies and wider indices exemplify that not all AI-influenced entities might secure a firm hold in the market, thus warranting a balanced approach to investing in AI-driven entities. While the direct promise of AI is enticing, the road to it is uncharted and filled with uncertainties. The tech revolution is upon us, and it demands wisdom and foresight from its market players.
Source: Coindesk
