Jim Covello, Goldman Sachs' head of equity research, warns of a potential reckoning for tech stocks driven by artificial intelligence (AI) investments.
Despite the current surge, he believes that AI may not deliver the revolutionary economic impact many expect, possibly leading to a market correction. Covello cites past tech bubbles, such as the dot-com era, as evidence that enthusiasm can outlast real benefits.
While AI investments are substantial—nearly $1 trillion projected—returns have been modest. Covello anticipates that if AI’s benefits do not materialize within the next 18 months, stocks like Nvidia may face significant declines.
Meanwhile, tech giants continue to invest heavily, with Nvidia and other major firms seeing record-high valuations despite modest returns from AI so far.
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