Howard Marks Flags the Uncertainty in AI Investing

Howard Marks says that when the Fed signals its next moves in excessive detail, markets become dependent on a single outcome, so investing and running businesses in ways that can withstand uncertainty is safer. He notes that the US economy and expectations for AI support market optimism, but warns against prices that are expensive relative to assets' intrinsic value and a mindset insensitive to bad news, given how much stock prices have risen since 2022. He argues that AI is useful for organizing information and preliminary analysis but should not replace important investment judgments or critical thinking, and that social problems such as tax revenue shortfalls resulting from job losses should also be considered in advance. His position is that although there is enthusiasm for AI investment today, the technology's actual uses, profitability, and earnings potential cannot be known precisely, so it cannot immediately be declared an irrational bubble. He therefore advises distinguishing between big tech companies that earn profits from existing businesses and pure AI companies with no track record yet, and choosing investment approaches and allocations according to the degree of uncertainty.