“Personally I Think AI Is Overhyped And We’re Going To Run Into Some Real Issues”

Benzinga

Dave Lauer joined Benzinga's Premarket Prep team to talk about how he thinks AI is overhyped and the comparison between .com stocks of the early 2000's and Nvidia's recent rally.

Transcript

00:00Dave, just going back to, I guess, the efficiencies or inefficiencies of the market.

00:06I think a lot of people would look at NVIDIA's price action of the last year and say, how

00:10efficient can the market be if you have a trillion dollar company tripling in a year?

00:17And then other people might say, that's the market being efficient because the market's

00:22pricing in future growth of the company and revenue increasing.

00:27Where would you stand on that viewpoint of just looking at, again, NVIDIA's stock price

00:34over the last year?

00:35Is this a sign of the market being efficient or do you think a sign of inefficiencies?

00:42I think it's a great question and it's a really hard one to answer.

00:47If you look at NVIDIA, and Dennis, I have had this conversation a couple of times, too.

00:50If you look at the Ford PE, it's not crazy, but it's pretty high.

00:54But it's nothing insane.

00:58How much of a difference does what we're talking about make?

01:03And I would say it makes a significant difference to individuals who are trying to buy NVIDIA

01:08through their retail brokers.

01:11And every time you buy, it's costing you more than you should.

01:17But I think what you're talking about is price discovery and you're saying, is the market

01:21efficiently finding the right price for this stock?

01:25And when you look at that chart, when I personally look at the chart, I find it hard to believe

01:30that that is not a bubble that will at some point come off.

01:34But it's a scary looking chart and it looks like a blow off top and it looks like everything

01:41you would think that you pull every comparison to the dot-com charts and you see very similar

01:48things.

01:49And I think from an AI perspective, personally, I think AI is quite overhyped and we're going

01:55to run into some real issues and already have.

01:58And it's sort of just like the shiny new thing at the moment.

02:01And it might eventually revolutionize everything.

02:04That is absolutely true.

02:05But I don't think we're there at all from a technological perspective.

02:10And so I do think that if you have a market in which liquidity is not as robust and diverse

02:18as it can be, and everyone piles into the same trade, you can end up with something

02:23like this in which the price discovery mechanism becomes kind of fundamentally broken.

02:28And then who knows where it will end up eventually once things sort of, you know, the market

02:35tends to catch up, right?

02:37And it tends to figure things out and short term it can do anything, but long term it

02:41tends to be reasonable.

02:43So, you know, I'm not optimistic about the way the market is operating today, given what

02:50I know about sort of the microstructure of it, as well as sort of what I know about AI

02:55and you know, what these companies are being valued at.

02:59But yeah, and I do, someone just said, it sounds like this guy doesn't own NVIDIA.

03:03Sure do, man.

03:04It's been great.

03:05Did you sell your NVIDIA yet?

03:06Have you sold any?

03:07I've not.

03:08He's had NVIDIA actually the whole way up.

03:12You know, and I'm thrilled that I did, but you know, I, it's hard because I tend to,

03:17it's almost like crypto.

03:18So I almost look at this like, I can look at crypto every time I've sold crypto, I've

03:23been wrong.

03:24Just don't sell.

03:25Yeah.

03:26But I bought my first Bitcoin at $2 a Bitcoin and I, of course, sold it.

03:32I thought I was early.

03:33I thought I was early at 400.

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