FX168 Financial News (North American): On Wednesday (July 4th), Capital Economics stated that the S&P 500 index has already surpassed more than 30 historical highs this year, and the AI frenzy will continue to boost the stock market until 2025. #AI trend##2024 investment strategy#
Neil Shearing, Chief Economist of the institution, predicted in a report this week that the benchmark index will reach a peak of 7,000 points by next year.
If it rises to this level, it will mark a 27% increase in the benchmark index.
Although early predictions of AI suggested that the bull market could continue for years, Shearing believes that this is a bubble that is destined to burst - but it will continue to expand until then.
"If we correctly recognize that there is an asset price bubble in the field of artificial intelligence - like other breakthrough technologies - then it is likely to continue to expand before it bursts," he said. "And it will definitely burst. It's a market fact that bubbles come and go."
While the frenzy of the AI market has been compared to the dot-com bubble of 2000, some do not agree with this analogy and point out that today's beneficiaries of AI are far less overvalued than those of the early dot-com bubble.
"I think our profits will continue to grow steadily, it's just that investors' enthusiasm may exceed profit growth."
In other words, the market is too optimistic about AI and it is too early.
Although investors have poured into this technology, believing that it will significantly boost productivity in the coming years, the company's report indicates that these benefits will not begin to materialize until the end of this century.
"At present, artificial intelligence is following the 'Gartner Hype Cycle', which indicates that people's views on the impact of new technologies are evolving over time," Shearing wrote. "At least in terms of the macroeconomic impact of AI, we are definitely approaching the pinnacle of inflation expectations."
(Source: Business Insider)
Before technology truly begins to work its magic on the economy, pessimism will arise.
In recent months, there has been new doubt about the actual impact of AI.
A study by Daron Acemoglu of MIT shows that productivity gains have been greatly overestimated - in fact, the contribution of AI to GDP growth in the next 10 years will only be 1%.
Last month, Goldman Sachs warned that the investment returns of artificial intelligence may disappoint companies: although large companies are expected to invest $1 trillion in this technology in the coming years, the performance of artificial intelligence may not offset these costs.