AI Bubble? Morgan Stanley Says Artificial Intelligence Is A Secular Investment Trend For The Next Decade

Morgan Stanley on Tuesday said that artificial intelligence (AI) and its related technologies are poised to revolutionize various sectors, dubbing it a pivotal investment trend for the upcoming decade.

What Happened: The financial institution delved into the possibility of the current surge in the AI sector could lead to a bubble, Coindesk reported.

The firm determined the performance of the AI index doesn't align with the typical patterns observed before the peak of historical bubbles.

A secular investment trend is defined as a persistent trend that remains unaffected by market fluctuations.

Analysts Edward Stanley and Matias Ovrum commented, "In the absence of knowing the date of the peak of the current AI bull-run, we assume the generative-AI fuelled market rally to have started with the launch of ChatGPT and so measure the current rally from December."

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The report indicated traditional investment bubbles usually witness a median surge of 154% in the three years leading up to their peak, and on average, an increase of 217%.

Why It Matters: Although AI frontrunners like Nvidia Corp NVDA have seen a rise of over 200% this year, broader AI indices have only experienced a growth of around 50%, not surpassing their 2021 peaks.

The research emphasized the unique attributes of AI, stating, "Stickiness and breadth of diffusion set AI apart from prior hype cycles."

On a related note, another financial powerhouse, Goldman Sachs, forecasted that the influence of AI on the U.S. economy will become significantly noticeable between 2025 and 2030.

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