The technology stocks that have led the U.S. stock market have once again been put to the test. This is the 'bubble theory' related to artificial intelligence (AI). There have been adjustments in technology stocks, but as the U.S. stock market reaches all-time highs, concerns about the valuation burden are impacting investor sentiment.
Currently, the technology sector accounts for 34% of the U.S. Standard and Poor's (S&P) 500 index, which is comparable to the peak of the dot-com bubble in March 2000 (33%).
The person who ignited the AI bubble theory was Sam Altman, CEO of OpenAI. In a recent interview, he said, "Investors are currently too excited about AI." Additionally, a report from researchers at MIT stating that "95% of AI corporations do not make revenue" has heightened investor caution. As these concerns spread, technology stocks in the U.S., Europe, and Asia have all declined.
However, there is no doubt that the AI industry remains the hottest theme in the market. This indicates that there is a high likelihood of steady investment in the medium to long term.
First, it is noteworthy that AI has emerged as a key pillar of U.S. economic growth. According to DAISHIN SECURITIES analysis, AI has begun to contribute more to the gross domestic product (GDP) than consumption. In the average GDP contributions over the last two quarters, consumption was just 0.6 percentage points, while AI investment accounted for a larger share at 1 percentage point.
Furthermore, as of June this year, the expenditure on data center construction in the U.S. reached $40 billion, nearing the expenditure on office construction ($44 billion). This is why evaluations suggest that AI investment has begun to drive the overall economy.
Policy support is also underpinning the expansion of AI investment. The U.S. Trump administration announced the 'AI action plan' last July, injecting significant liquidity into the AI industry. This plan aims to ease AI regulations and accelerate innovation. Additionally, the European Union (EU) has agreed to support $600 billion in private investments in strategic industries in the U.S. by 2028 through tariff agreements with the U.S.
Park Hyun-jung, a researcher at DAISHIN SECURITIES, noted, "In a selective liquidity market, we need to pay attention to themes like AI and AI infrastructure that will benefit from policies," and added, "While there are strong expectations for interest rate cuts, high rates and inflationary pressures remain, so funding will concentrate on strategic industries with clear policy and growth stories."
There are evaluations that we need to look closely at Sam Altman's comments, which ignited the AI bubble theory. He acknowledged the overheated phase surrounding the AI industry but stated, "Companies with core technologies will survive even if the bubble bursts, and in the long run, AI will contribute significantly to the economy." This implies that we need to sift out the so-called scam corporations and select those with economic moats.
The short-term inflection point for AI investment is expected to be the earnings announcement of NVIDIA (NVDA) coming early on the 28th by Korean time. Matt O'Hearn, chief strategist at Raymond James, stated, "NVIDIA is a proxy showing how AI is evolving," and added, "The core driving force of the S&P 500's returns is directly reflected in investor sentiment for AI investment."