Ignore The ‘AI Revolution’ At Your Own Peril, Investors Warn

(Bloomberg) -- While a recent selloff in shares of chipmaker Nvidia Corp. may have fueled fears of an artificial intelligence bubble, investors and asset managers still take a broadly positive view of the technology — with some caveats.

Speaking at the Bloomberg Invest summit Tuesday, Coatue Management founder Philippe Laffont said he’s bullish on AI despite the hype, pointing out that increased chatter about an investment can actually be a good sign.

But he expressed some concern about geopolitical instability in China potentially affecting production of the chips that power AI computing. If China invades Taiwan, for example, it would adversely affect Nvidia shares and global stock markets, Laffont said. 

Nvidia, the darling of the AI boom, gained 6.8% on Tuesday, rebounding from a recent selloff that erased $430 billion of its market value. Earlier in the day, Neuberger Berman portfolio manager Steve Eisman — who gained fame betting against subprime mortgages and owns “a lot” of Nvidia shares — said he’s undeterred. 

“If you look at the chart on Nvidia, you can barely see the correction,” Eisman said in a separate Bloomberg Television interview on Tuesday. “I don’t think it means anything.” 

During wide-ranging discussions at Bloomberg Invest, hedge fund executives, chief investment officers and others weighed in on AI as an investment and also discussed the promise of such technology for increasing productivity in the investing world.

Apollo Global Management Inc. — an alternative asset manager that oversaw about $671 billion at the end of the first quarter — sees an investing opportunity at the intersection of the energy transition and AI infrastructure, according to John Zito, deputy chief investment officer for its credit arm.

“It requires trillions of spend on a long-dated basis, and I think we’re just naturally the place to allocate that,” he said, noting that Apollo provided financing to semiconductor firm Wolfspeed Inc., and participated in a recent deal with Intel Corp.

Mohammed Al-Sowaidi, the Qatar Investment Authority’s chief investment officer for the Americas, acknowledged the “buzz” around AI. 

“Fundamentally all businesses need to be more efficient,” he said. “One of the ways to make humans more efficient in their procedures and make companies more efficient is to empower them with AI.”

Man Group Chief Executive Officer Robyn Grew said her firm, which manages roughly $175.7 billion and is best known for its systematic strategies, has been using AI for at least a decade. 

“It’s part of our DNA,” Grew said.

The London-based firm has doubled its assets under management since 2016, but hasn’t increased its headcount in operations, she said. Still, AI won’t make better decisions than humans, according to Grew. The real benefit of AI is to improve employees’ performance rather than replacing them, she said.

When it comes to investing, AI isn’t “just about a backward look from predictive modeling,” she said. Instead, according to Grew, the technology should be used to find “new, uncorrelated” sources of investment. 

Freestone Grove’s head of quantitative strategies, Daniel Morillo, expressed a similar sentiment in an earlier discussion on Tuesday. The hedge fund firm, which launched earlier this year with $3.5 billion of commitments, has focused on using AI to help the investment process, versus making judgments on the investment side.

One theme most panelists would agree on: The most dangerous thing you can do around AI investing is to stay on the sidelines. 

“It would be irresponsible of us to ignore the AI revolution,” said Kim Lew, CEO for Columbia University’s endowment.

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