Bubble bursting vs. huge profits: risks of AI craze, Wall Street bosses have two polar opinions

While some of Wall Street's most prominent CEOs talk about the huge profits that could come from trading in artificial intelligence (AI), some heavyweight asset managers are warning about the risks of the AI ​​boom. PIMCO CEO Emmanuel Roman and Bain Capital Chairman John Connaughton warned that after rapid expansion in the AI ​​field, there is a risk of a bubble and the craze will eventually subside.

Bloomberg reported that Roman said at the International Financial Leaders Investment Summit held in Hong Kong on the 3rd that the scale of AI-related financing may increase to approximately US$10 trillion in the next five years, eventually reaching an excessive level.

"At some point, the craze will subside, and then problems will arise," he said. He added that any factors, such as U.S. interest rate hikes, war in the Middle East or the euro zone crisis, could trigger a plunge in AI trading.

Bain's Connaughton said, "The bubble will definitely burst. We think the current valuation is very high, but the real question for AI is whether it can generate income from such a valuation."

Howard Marks, co-chairman of Oaktree Capital, also pointed out that the market has raised doubts about AI and that AI is an "overcrowded trade." Capital Group's Jody Jonsson said there is a gap between AI companies' expectations and actual adoption speed.

However, in the face of the huge potential business brought by ultra-large-scale cloud service providers eager to raise funds, some Wall Street bank bosses are obviously optimistic.

Goldman Sachs Group CEO David Solomon said of this technology "supercycle" that "there are bound to be bumps in the road." He added that despite short-term fluctuations, the capital market is still active. "Investors are still paying attention to the trend of AI and computing power demand, and the capital market is also responding to related needs."

Morgan Stanley CEO Ted Pick pointed out that capital expenditures in the field of AI may reach US$10 trillion to US$15 trillion, cementing its status as the most significant economic transformation since the advent of the Internet.

Blackstone Group President Jon Gray also expressed optimism. "It's probably healthy to have questions at this point," he said. He added that broader AI trends mean more investment and significantly increased capital requirements.

He said, "What is happening now is very far-reaching, and it would be a mistake to underestimate the productivity gains that are coming and the transformation of consumers and businesses."