Hedge fund investor warns of AI bubble due to low demand, predicts pullback in AI stocks.

From Nasdaq: 2024-08-28 10:07:00

ChatGPT launched in November 2022, triggering an AI bubble. The chatbot sparked an arms race, boosting demand for Nvidia GPUs and raising its market value to over $3 trillion.

Despite massive AI investments, end-user demand remains low. Sequoia Capital’s David Cahn warns of a tipping point in the AI bubble due to lack of revenue generation.

Cahn projects a $600 billion shortfall in AI revenue, highlighting the need to justify the billions spent on AI infrastructure.

While Cahn predicts a pullback in AI stock valuations, he remains optimistic about AI’s long-term value creation potential.

Investors may see a pullback in AI stocks like Nvidia, but the sector’s transformative potential suggests a bright future for long-term investors.

Motley Fool’s Stock Advisor analysts do not currently recommend Nvidia, citing other better investment opportunities.

Big tech companies’ increased AI spending faces investor resistance as they seek to generate substantial revenue to support their investments.

The author highlights that the views expressed are their own and may not reflect those of Nasdaq, Inc.



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