Mary Callahan Erdoes, CEO of JPMorgan Asset and Wealth Management, reassured investors at the CNBC Delivering Alpha conference on Thursday that artificial intelligence (AI) is not in a bubble, but rather represents a significant investment opportunity. She argued that concerns over the skyrocketing valuations of AI-related companies, such as Nvidia and AMD, should be viewed as short-term volatility rather than a sign of an impending market crash.
Erdoes emphasized that the AI industry is still in its early stages, with potential that has yet to be fully realized. “We’re just on the precipice of a lot of this stuff,” she said, explaining that while market prices might be disconnected from the actual usage of AI technologies, the potential for growth remains vast. She compared the situation to a gradual buildup that will suddenly accelerate, similar to Ernest Hemingway’s description of bankruptcy: “very, very slowly, and then all of a sudden.”
Despite recent market fluctuations, Erdoes dismissed the idea of AI being a bubble, calling it a “crazy concept.” She believes AI is on the brink of a major revolution in how businesses operate, creating explosive growth in both revenues and expenses. This, she said, will require suppliers to adapt quickly to meet demand.
Erdoes’ optimistic view was echoed by Michael Arougheti, CEO of Ares Management, who noted that current investments in AI are minimal compared to its potential economic impact. “We have a long way to go in terms of the economic investment relative to the size of the economy,” he stated, adding that the growth of AI technologies cannot keep pace with the current demand.
On broader economic issues, Erdoes also indicated that she does not foresee a recession in the near future, dismissing ongoing recession predictions that have persisted for years. In the absence of a recession, she sees this as an ideal time for investors to “lean in and buy,” particularly in credit investments, which are currently a great opportunity.
As AI technologies continue to advance, both Erdoes and Arougheti expressed confidence in the long-term growth potential of the sector, advising investors to focus on the opportunities ahead rather than the fears of short-term market volatility.
