The emergence of an artificial intelligence (AI) bubble carries implications for global markets, given the significance of AI-related stocks in major economies, particularly in the US. Although the current situation differs from previous market crises like sub-prime or tech bubbles.

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In an interview with CNBC-TV18, Richard Harris, Chief Executive at Port Shelter Investment Management expressed his concerns about the potential slowdown of the artificial intelligence (AI) rally and its possible impact on global markets.

He emphasised that while AI is expected to continue developing, it may take some time to reach its full potential. Moreover, he cautioned against an AI bubble, noting that it is unlike any previous bubbles such as the sub-prime or tech bubbles.

“It's nothing like the dot com bubble or maybe the subprime bubble that we saw in 2007. But I think it's a bubble nevertheless, especially those stocks that have been associated with AI,” Harris said.

Further talking about the AI rally, he said, it has been gaining significant momentum in recent years, but could be on the verge of a slowdown now. While acknowledging the continued development of AI technologies, he suggested that it may take longer than anticipated for the full potential of AI to be realised.

Harris also touched upon the recent sluggishness observed in the US market since the end of June. While not directly attributing it to the AI sector, he acknowledged the possibility of broader market factors influencing the overall performance. Economic indicators, geopolitical tensions, and changing investor sentiment are among the factors that could contribute to the current market conditions.

According to him, the emergence of an AI bubble carries implications for global markets given the significance of AI-related stocks in major economies, particularly in the US. Harris's concerns extend beyond the US market, as he identified similar patterns in India and the potential for the bubble's influence to spill over into other markets.

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(Edited by : C H Unnikrishnan)

First Published:Jul 6, 2023 1:22 PM IST