Artificial intelligence is revolutionary, but it is also a bubble waiting to pop. Just look at Nvidia ‘s stock price and match it with history.
Nvidia’s stock was down by 3.1% to $470.60 on Wednesday, a small dip compared with the 222% gain recorded for the year so far. It trades at 34.1 times the per-share earnings it is expected to produce over the next 12 months, but in mid May, the valuation was at 63 times, near its record of 70.6 times.
AI-related stocks such as Nvidia, Advanced Micro Devices and others have helped the S&P 500 to rise 17% this year. The point to remember, Arnott wrote, is that whenever a bull market emerges from a powerful narrative propelling the stock prices of a narrow group of popular companies, those stocks may disappoint in the years to come.
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