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JPMorgan Vice Chairman Daniel Pinto: AI Sector Valuations Remain High, Correction Expected
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JPMorgan Chase Vice Chairman Daniel Pinto said that valuations in the artificial intelligence sector remain too high and predicted that the industry will see a correction. He made the remarks during a panel discussion at the Global Financial Leaders' Investment Summit hosted by the Hong Kong Monetary Authority. Currently, the AI investment boom continues, and controversy over high valuations is intensifying.
Pinto said he does believe productivity will experience a major surge and that AI will have a significant impact. However, he cautioned that growth rates should be viewed prudently. The reason is that the technologies and businesses currently being developed ultimately need someone to pay for them.
He further pointed out that industries outside AI and other parties must pay trillions of dollars to AI companies to justify these investments. Pinto believes AI companies need to prove that such a massive scale of investment and current valuations are reasonable. He said bluntly that the current pace may be a bit too fast.
Pinto expects the AI industry may see a "correction." He said that compared with these companies' current market prices, market expectations for their revenue and profit growth may be somewhat too steep. This expectation gap could lead to a repricing of the entire industry.
In terms of background, David Lebovitz, global market strategist at JPMorgan Asset Management, said in July this year that investors are becoming more sophisticated in distinguishing the potential risks and rewards brought by AI. As AI gradually evolves into a trading theme covering various asset classes and industries, this will become a lesson Wall Street must master.
Lebovitz also mentioned that investors have begun to distinguish different segments of the AI industry chain in greater detail, determining which areas may have excess supply and which areas still have strong demand. The market is no longer simply holding the idea of "if you're bullish on AI, buy every asset connected to AI." For the AI sector, whether future valuations can be digested still depends on the extent to which revenue and earnings are delivered.
