This year, artificial intelligence (AI) not only drove a series of historic highs in the US stock market, but also helped Nvidia (NVDA.US), Microsoft (MSFT.US), and Apple (AAPL.US) achieve better-than-expected corporate profits.

Zhitong Finance and Economics App learned that Neil Shearing, chief economist at Capital Economics, believes that AI may help the S&P 500 index reach its peak at 7,000 points in 2025, although he also sees similarities with the previous "Internet bubble".

Shearing wrote in his client report on Monday: "The experience of the Internet bubble shows that US stock market valuations can further rise-the additional multiple expansion expectations driven by the optimistic sentiment of AI are the reasons we believe that the S&P 500 index may reach 7,000 points next year."

However, AI may take longer to have a significant impact on the US economy, although recent innovations (such as the Internet) are spreading faster in the economy (see the figure below).

For example, according to Capital Economics, it took more than 70 years for the invention of the steam locomotive to be widely adopted, while the adoption lag time of the information and communication technology revolution was shortened to five to ten years. In the mid-1990s, the impact of technology began to show in economic data, and the growth rate of US productivity in the second half of this decade was about twice that of the 1980s.

Shearing believes that the AI revolution will begin to have an impact on the economy in the second half of this decade.

The rising trend of Nvidia and other AI-related companies seems unstoppable, which makes some investors worried about the speculation of this technology.

In fact, Shearing said that the current situation seems to follow the "Gartner Hype Cycle", which shows how public perception of new technology evolves over time (see the figure below) .

Shearing said: "As far as the macroeconomic impact of AI is concerned, we are definitely approaching the peak of exaggeration. This means that we will now go through a period of skepticism, then reach a peak of pessimism, and eventually the benefits of productivity will begin to show."

He pointed out that Nvidia investors are trying to capture the benefits of new technology before its economic benefits are fully demonstrated, which has led to increasing doubts about the ultimate economic benefits of this AI revolution.

He added that this concern may explain the recent fluctuations in Nvidia's stock price. From June 20 to 24, Nvidia's stock price fell by more than 13%, and then partially rebounded last week. As of 2024, the current S&P 500 index has risen by nearly 15% and closed at 5,475.09 points on Monday.