Billionaire investor Mark Cuban is arguing against the notion that artificial intelligence will be a primary driver of deflation and believes that it will be a massive driver of innovation and productivity.
What Happened: Anthony Pompliano, the founder and CEO of Professional Capital Management, in an X post claimed that AI will be the “strongest deflationary forces we will see in our lifetime.”
However, the American businessman and Shark Tank fame Cuban argued against this idea and said, “Disagree. Generative AI will be the greatest growth and productivity engine ever. We will see amazing new s**t that replaces the old s**t.”
He contends that entrepreneurs and investors will prioritize developing these new, high-potential AI-driven products over simply making existing products cheaper.
Cuban also defines deflation as a decrease in the price of existing goods and explains that AI will create new goods and services, for which people will pay a premium, rather than simply making existing goods cheaper. Therefore, he doesn’t believe AI will cause deflation.
“Deflation happens when we get more of what we already got at a cheaper price. When everything is new, entrepreneurs will charge what the market will bear,” said Cuban.
He also predicts that intellectual property will become increasingly valuable, as companies seek to protect their unique AI models and data. According to him, companies will start to paywall their IP, especially in fields like medicine, which will create many different models, instead of one model to rule them all.
Why It Matters: Apart from this, replying to other comments about AI taking up human jobs. Cuban claimed that he sees “more jobs” in the future. He explains that humans have a unique ability to capture and process real-time information from the world around them, which AI is not yet capable of.
Cuban also says new jobs will be particularly created in areas related to operating and managing AI-driven companies and conveying real-world information to AI models.
Despite these claims, Goldman Sachs, in their recent report, increased its U.S. recession probability from 20% to 35%, and its asset allocation research head, Christian Mueller-Glissmann, said in a note that “The equity drawdown probability hasn’t peaked yet.” While some economists and experts have forecasted a stagflationary scenario, PIMCO has pegged the possibility of a recession at 30-35%.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Tuesday. The SPY was up 0.28% to $560.97, while the QQQ advanced 0.81% to $472.70, according to Benzinga Pro data.
On Wednesday, futures of the Dow Jones index were down 0.12%, whereas the S&P 500 and Nasdaq 100 indices also dropped by 0.16% and 0.15%, respectively.
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