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What's the difference between a revolution and a market bubble?
Often, it's time and patience — two things that Wall Street is notoriously lacking.
But as the artificial intelligence boom reaches into more areas of workers' lives and sends stocks hurtling sky high, some investors worry about whether AI is the real deal and what happens if it isn't.
What's happening: Shares of Nvidia have exploded higher with no end to their upward trajectory in sight. The California chip-maker's stock is about 240% higher over the past year, and it isn't alone.
AMD is up 126.5% since a year ago, and Taiwan Semiconductor Manufacturing Co stock is nearly 50% higher over the same period.
The so-called Magnificent Seven tech stocks — Apple, Microsoft, Nvidia, Amazon, Google, Meta and Tesla — that dominate the S&P 500 have also benefited greatly from AI buzz. They're collectively up about 55% over the past year.
Large companies, meanwhile, are already shifting their resources to invest heavily in AI technology and are sometimes laying off employees in anticipation of an increase in productivity through automation.
"This is not hype," JPMorgan Chase CEO Jamie Dimon told CNBC on Monday of AI.
Dimon, who is often skeptical of new technologies and fads, said that there are about 200 people at JPMorgan dedicated to researching generative AI.
"When we had the internet bubble the first time around… that was hype. This is not hype. It's real," he said. "People are deploying it at different speeds, but it will handle a tremendous amount of stuff."
Not everyone is convinced: The top 10 companies in the S&P 500 are more overvalued today than they were during the tech bubble in the mid-1990s, wrote Torsten Slok, chief economist at Apollo Global Management, in a note to investors on Sunday, citing the companies' price to earnings ratios.
The growth of these companies has created a Teflon stock market — nothing bad seems to stick to it, even higher-than-expected inflation data and delayed expectations for interest rate cuts by the Federal Reserve, said Yung-Yu Ma, chief investment officer at BMO Wealth Management.
"The idea that AI can unleash both spending and productivity is a strong narrative that markets are focused on right now," he said.
But that sole focus on AI is worrisome.
"Thoughts of the mid-1990s (tech boom) are creeping into today's equity market, as during that time the ensuing productivity boom propelled equities for years despite relatively high interest rates," he said.
"The current hype may be slightly more advanced than what AI can deliver in the near-term for productivity gains."
Looking under the hood: Some shareholders are also worried about Big Tech's investment in AI.
Apple is reportedly on track to spend $1 billion a year on generative AI.
Two very large Apple investors, Norges Bank Investment Management and Legal & General, have said that they will support a resolution at the company's annual shareholder meeting Wednesday that would require the iPhone maker to disclose and report AI-related risks.
The proposal asks the company to "disclose any ethical guidelines that the company has adopted regarding use of AI technology."
The shareholder proposal was introduced by the union federation AFL-CIO.
In a filing to the US Securities and Exchange Commission, Apple proposed the vote be skipped. Lawyers for the company argued that shareholders were being too controlling by requesting the disclosure of AI risks.
The SEC disagreed.
"In our view, the proposal transcends ordinary business matters and does not seek to micromanage the company," the agency wrote.
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