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Wharton’s Jeremy Siegel predicts a Big Tech boom driven by AI

Wharton professor and renowned economist Jeremy Siegel is bullish on the Big Tech boom powered by artificial intelligence, despite concerns of a bubble.

An AI chip craze driven by demand for AI-powered chatbots and high-powered graphics processing units — used to train such chatbots on supercomputers — has investors piling into some stocks, with some growing concerns of a bubble. Is.

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“It’s not a bubble yet,” said Siegel, Russell E. Palmer, professor of finance at the Wharton School of the University of Pennsylvania, on CNBC’s “Street Science Asia” Monday. He said he is getting questions about whether this will lead to a repeat of the dot-com bubble of the late 1990s.

Economist David Rosenberg, known for his contrarian views, predicted that the current AI boom could collapse like dot-com stocks in the late 1990s. The dotcom bubble burst when capital dried up following the mass adoption of the Internet and the proliferation of venture capital available in Internet-based companies, especially startups that had no track record of success.

Siegel said, “First, there was enthusiasm about AI and Nvidia confirmed that enthusiasm with stellar earnings. It’s a double whammy.”

Nvidia shares soared 24% on Thursday after the firm posted better-than-expected top and bottom lines in the most recent quarter, reaching all-time highs on the back of an explosion in demand for Nvidia chips used in AI. Went. The rally pushed the chip maker’s market capitalization to nearly $1 trillion.

Nvidia CEO Jensen Huang said during the earnings call that the company was seeing “increasing demand” for its data center products. Nvidia shares are up 166% year-to-date.

,[In the] long time i will say that [Nvidia shares] Might have been a bit overpriced. But over the short term, we know momentum can take stocks far above their fundamental value, and no one can predict how high they can go,” Siegel said.

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On Sunday, Nvidia announced a new class of large-memory AI supercomputers built to enable the development of large, next-generation models for generative AI language applications. The supercomputer powered by the Nvidia GH200 Grace Hopper superchip is expected to provide around 500 times more memory than the previous generation Nvidia DGX A100 – which was introduced in 2020.

“Generative AI, large language models and recommender systems are the digital engines of the modern economy,” Huang said in the press release. “The DGX GH200 AI supercomputer integrates Nvidia’s most advanced accelerated computing and networking technologies to expand the limits of AI.”

Wharton’s Siegel says AI stocks have helped propel prices S&P 500 And it could turn out to be “a winner from the banking crisis”.

“As we all know, the top eight or nine companies have accounted for all of the S&P 500’s gains. This year, the other 490 have been flat or down. Yes, [the] The Nasdaq was oversold in 2022 and it bounced back but I think AI has pushed those big cap tech stocks even higher,” Siegel said.

“Remember any type of Big Cap stocks, whether they are technical or not, don’t have to worry about credit terms. Yes, they have to worry about interest rates for sure. Credit Position Affecting small. and medium sized [companies]Siegel said.

“The S&P may actually emerge a winner from the banking crisis.”

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