Davis asserts that while AI has potential for productivity growth, it has not yet justified current lofty stock valuations and is unlikely to avert an economic slowdown.
Over the past year, AI investments surged significantly, escalating from $67 billion last year to an anticipated $76 billion this year, but substantial economic impact is contingent on much higher spending.
The expectation that AI could almost instantaneously boost the economy and market performance is misguided; true economic benefits will require significant time and investment.
Davis emphasizes the detachment between current market exuberance linked to AI and the actual economic growth necessary to sustain such high equity valuations.
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