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Cathie Wood's ARK Invest sometimes resembles the wild west of investment research, replete with rosy projections that are by and large divorced from principles of pragmatic investing. Now, Wedbush's Dan Ives has come forward with a reality check to ARK Invest's wildly effervescent take on AI's prospects.
AI is in a 'baby bubble' that echoes the dot-com era, per Bank of America, $BAC.
— unusual_whales (@unusual_whales) May 22, 2023
According to the Bank of America, AI is in a "baby bubble" right now, akin to the early internet companies in the dot-com era.
AI - new highs on Google Trends pic.twitter.com/4tGeglB2Bw
— Breakout Point (@BreakoutPoint) May 22, 2023
As another evidence of a bubble, consider the fact that AI-related searches have now surpassed peak interest in NFTs and GameStop.
According to Cathie Wood's ARK Invest, AI will fuel an expenditure galore over the next decade, with software spending rising from $1 trillion today to $14 trillion in 2030. Moreover, the investment management company believes that total IT spending will increase by 20 percent per annum this decade, surpassing $20 trillion by 2030 vs. the current consensus estimate of just $5 trillion.
ARK Invest also believes that AI-related advancements will fuel hefty productivity gains, resulting in AI-assisted total annual output worth $200 trillion. For reference, the world's combined GDP in 2021 was just $97 trillion.
Can these rosy prognostications pan out? Certainly. There are signs, however, that ARK Invest's AI-related thesis might just be too good for reality and in line with the firm's penchant for grabbing headlines via wildly outlandish projections. Consider the fact that the investment firm maintains an equally effervescent stance vis-à-vis Tesla, believing that the stock would go up a whopping 800 percent by 2027, that too in the worst-case scenario!
Of course, Cathie Wood had also gone big on Zoom in the pandemic era. The stock was trading at a $500-plus price level in late 2020. Today, the stock is trading at around $70.
Against this backdrop, Wedbush's Dan Ives is out today with a much more measured take on AI. The analyst believes that AI-related advancements will represent an $800 billion market by the end of the decade:
"This is an $800 billion market opportunity over the next decade as this AI Game of Thrones plays out across the enterprise and consumer tech space."
Meanwhile, we just got another dose of reality today when an AI-generated image briefly spawned headlines of a blast at the Pentagon. Of course, as this technology matures, such dupes would become much harder.
AI + Misinformation = Recipe for disaster https://t.co/VYt22jFepc
— Heisenberg (@Mr_Derivatives) May 22, 2023
In a related development, Deutsche Bank came out with an encouraging investment note today, stating that AI would create jobs instead of destroying them:
AI Will Create, Not Destroy Jobs, Deutsche Bank Says pic.twitter.com/5lGB7CSGd9
— *Walter Bloomberg (@DeItaone) May 22, 2023
Do you think ARK Invest is right on its wildly outlandish projections for the AI market? Let us know your thoughts in the comments section below.
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