“A rising tide has lifted all boats so far.” But now you have to be careful

Market bears compare the current situation on financial markets not to the dotcom bubble, but to the great crisis of 2008. However, what is currently drawing the most attention among Wall Street financiers is the sell-off in software stocks and the new investment opportunities that come with it.

Jamie Dimon: I see a lot of people doing stupid things

Jamie Dimon, CEO of JPMorgan Chase, told investors this week that he sees players in the banking industry doing stupid things to increase their interest income.

– Unfortunately, we already saw it in 2005, 2006 and 2007, it was almost the same phenomenon. A rising tide lifted all boats, everyone made a lot of money, he told investors.

The bank, led by Jamie Dimon, is, in its own words, not willing to make riskier loans in order to increase its net interest income, but not everyone in the sector is doing the same.

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– I see some people doing stupid things. They just do stupid things to generate higher interest income, he said.

Ulrike Hoffmann-Burchardi: The entire digital economy is facing verification

Ulrike Hoffmann-Burchardi, director of investments for the US market at UBS Wealth Management, claims that the threat from artificial intelligence (AI) should make investors pay attention to companies whose operations take place outside the digital space.

The asset management company is transforming its portfolios by moving “from bits to atoms”. This means supplementing them with shares of companies from the mining, energy and industrial sectors.

– The macroeconomic environment is very, very favorable, but I believe that the artificial intelligence segment will become more and more difficult – said the expert.

AI technologies may affect not only software companies, but also other services, such as law or finance. Many software-based industries are at risk of being impacted.

– Over the past few years, it seems that a rising tide has lifted all boats, but this year it will be artificial intelligence that increasingly separates the winners from the losers. The entire digital economy may be verified through the prism of AI, which poses a risk for a large part of the stock market, said Ulrike Hoffman-Burchardi.

Morgan Stanley: AI Panic Is a Stock Picking Opportunity

Where some see threats, others see opportunities. Strategists from the Morgan Stanley investment bank claim that in the face of panic related to the impact of artificial intelligence on IT companies, investors should look for attractive opportunities to buy shares of companies that they consider to be AI veterans, i.e. companies that have the power to shape prices in their sectors and are ready to implement this technology.

– In the short term, the benefits of implementing artificial intelligence help offset fears of long-term shocks in directly exposed sectors and in the broader market – say the bank's analysts.

While software companies have been hit hard as investors fear they will lose out in the competition against emerging AI tools, what has gone unrecognized is that strong companies themselves will benefit by integrating AI into their products.

For this reason, Morgan Stanley analysts see attractive entry levels for shares of companies such as Microsoft, Intuit and Atlassian.

Head of Citrini Research: Our report hit a sensitive spot in the markets

“If I had known the stock would react this way, I wouldn't have given this report away for free,” he said James van Geelen, head of Citrini Research.

It was his article “The Global Intelligence Crisis in 2028” that became one of the factors that triggered the sudden sell-off in stocks earlier this week.

In their text, Citrini Research analysts decided to answer the question: what if our optimism towards AI is still justified and what if this is actually a pessimistic scenario?

The dystopian essay, presented as the company's report for investors with a 2028 perspective, outlined a scenario in which artificial intelligence shakes the economy so much that unemployment in the US jumps above 10%, entire companies disappear, and an economic crisis breaks out in the world.

Shares of companies mentioned in the publication, such as ServiceNow, DoorDash and American Express, fell significantly.

“The market is clearly nervous about this,” admitted van Geelen. – The article served as a focal point for investors who were already concerned about the secondary disruptions AI could cause in established businesses. This nervousness reached its peak when our text pointed the finger at the worst-case scenario.

Nvidia CEO: Agent AI has had its moment

Jensen Huang, CEO of Nvidia, presented another fantastic quarterly results to investors this week and appeared publicly to comment on them.

– Observing the popularity of Claude Cowork and OpenClaw, we see that the demand for computing power is growing at an astronomical pace. Agent AI has had its ChatGPT moment, said Jensen Huang, drawing a parallel between the growing number of agent AI applications in recent months and the meteoric rise in popularity of ChatGPT at the end of 2022.

However, in his opinion, the markets' reaction to this phenomenon was not rational.

“I think the markets got it wrong,” said Jensen Huang when asked on CNBC about the apocalypse in the SaaS sector.

According to him, the market belief that agent-based AI will destroy the software as a service (SaaS) segment is wrong.

– All these tools that we use today, whether it's Cadence, Synopsis, ServiceNow or SAP, exist for a reason. Agent AI will be intelligent software that will use these tools at our command and help us be more productive – argued the head of Nvidia.