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It starting to look like some of the fervor over AI stocks may be dying down. Tematica Research Chief Investment Officer Chris Versace says the hype over AI stocks reminds him of the early days of the internet. Versace says that although we are starting to see some benefits to AI, there is "a lot more to go." "My fear is, despite the very good guidance that Nvidia gave, that we just see too many companies mentioning wherever they can the promise of AI and the disruptive power on its business," Versace says. Versace goes on to say that "the more concrete examples we have of where AI is showing real benefits to companies, I think, the more real the AI revolution becomes, in the near term."
The biggest winner of this AI hype cycle has been Nvidia (NVDA). Versace admits his firm missed out on Nvidia's move, having chosen to invest in Marvell Technology (MRVL). When it comes to Nvidia, Versace says "the easy money has been made. I think they need to show a lot more progress on what they're doing and really start to deliver on that guidance."
Video Transcript
CHRIS VERSACE: So let's just think about AI and the disruptive promise that it has. I've likened this a lot to what we saw back in 1999 to 2001 with the internet.
And I say that because if you think about what we use the internet for today, whether as I'm communicating with you guys today through Zoom, whether we're paying bills, streaming movies, downloading books, whatever it is, we didn't really have a firm grasp of what that was at the start of the internet age. And I would argue that we're pretty much like that today.
Are we starting to see some benefits relating to AI in advertising in productivity? Yes, we are. But I would argue that we have a lot more to go. My fear is that despite the very good guidance that Nvidia gave, that we just see too many companies, you know, mentioning wherever they can the promise of AI and the disruptive power on its business.
Yet we have other companies like Microsoft are saying like, look, we see the promise. But we need to invest to further deliver on the benefits of AI to our customers, our user base.
So I think it's going to be kind of bouncy. I hate to say that because it's rather nebulous, Brad. But I think we're going to have more concrete-- let me put it this way. The more concrete examples we have of where AI is showing real benefits to companies, I think the more real the AI revolution becomes in the near term. Longer term, I do expect it to be rather disruptive.
RACHELLE AKUFFO: And it is tough to avoid this FOMO that you're seeing, obviously. A lot of companies just sort of throwing generative AI out there without really, as you're saying, having proper use cases. But especially as you look at Nvidia and how expensive it is, a lot of hedge funds were hesitant to jump on that bandwagon is it too late? Have they already missed the boat given where Nvidia's price action is at now.