Survey of 172 Fund Managers
Half of Respondents Say AI Stocks Are "in a Bubble"
The majority of fund managers worldwide currently believe that investments related to artificial intelligence (AI) are in an overheated phase. Some have pointed out that AI-related stocks have already entered a bubble stage, identifying this as a greater tail risk than inflation or a slowdown in U.S. consumer spending.
On November 18 (local time), Bank of America (BofA) released the results of a survey conducted from November 7 to 13 among 172 fund managers overseeing assets worth $500 billion. In this survey, the proportion of respondents who said that 'AI investment is excessive' was 20 percentage points higher than those who said it was not. This is the first time since BofA began compiling related statistics in 2005 that the majority opinion has been that of overinvestment. BofA analysts explained, "This reflects growing concerns about the scale of AI capital expenditures and the ways in which these investments are being financed."
In fact, the bond market has seen a surge in financing for AI-related projects. According to the Financial Times (FT), U.S. companies have issued more than $200 billion (about 293 trillion won) in corporate bonds this year to fund AI projects, and there are warnings in the market that a 'flood' of even more corporate bonds could be on the way.
Anton Dobrovolskiy, a fixed income portfolio specialist at T. Rowe Price, said, "Both public and private credit have become major sources of funding for AI investments, and the rapid expansion of this market is raising concerns." Barclays projected that the cumulative investment in AI by hyperscalers (large-scale cloud service providers) and small and medium-sized enterprises could exceed 10% of the U.S. gross domestic product (GDP) by 2029.
As the technology stocks that have led the U.S. stock market this year are facing corrections amid bubble concerns, fund managers are also wary of an AI bubble. More than half of the respondents diagnosed that AI stocks are already in a bubble state.
Forty-five percent of respondents identified the AI bubble as the greatest tail risk to the global economy. This is a significant increase from 33% a month ago, indicating that concerns about an AI bubble are spreading in the market. Tail risk refers to a risk that has a low probability of occurring but can cause massive shocks to the market if it materializes. Respondents viewed the AI bubble as a greater threat than inflation or a slowdown in U.S. consumer spending.
Interestingly, despite growing concerns about overheating and the possibility of an AI bubble, investor sentiment has actually improved. The proportion of respondents increasing their allocations to global equities and other risk assets reached its highest level since February of this year.
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