AI stocks look promising long-term, but may be overvalued now, investing experts say

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Investors are bullish on AI as a long-term investment, but it will have to deliver lofty results to justify what companies are spending on it, experts say.

Just about everyone in the investing world, it seems, is bullish on artificial intelligence over the long term.

But whenever you have that rapid a rise, you have to be aware of the risk that investors have gotten out over their skis, says Christopher R. Jackson, senior vice president at UBS Wealth Management."I don't think anyone would tell you that AI is not a generational investment theme," he says."I think the concern, especially over the near term, is how quickly things have gone.

"AI technology is exceptionally expensive, and to justify those costs, the technology must be able to solve complex problems, which it isn't designed to do," he said in an interview with Goldman analysts. None of that is to say that AI technology isn't the way of the future. But if the future is further down the road than expected, certain firms that are spending heavily now may find themselves in precarious positions in the intermediate term, says Jackson.

But the expectation among many market watchers is that AI will radically increase business productivity for a wide variety of companies in the future. If that future is further away than previously thought, you may see some investor enthusiasm dim, which in turn could put a damper on stock prices, says Jackson.

 

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