Josh Brown says AI bubble popping is the biggest risk to this market
Artificial intelligence is a huge variable in the market heading into the end of the year, said Josh Brown, CEO of Ritholtz Wealth Management. “I think AI is the biggest risk to the market,” he said in a PRO Talks interview with Mike Santoli on the sidelines of CNBC’s Delivering Alpha conference. “Yes, I’m excited about AI, I’m flesh and blood. … Also very worried that we may have gotten too excited too soon, and I think that presents a fairly substantial psychological risk to the market into year-end.” AI has been a major theme among investors this year, sending a handful of stocks seen as ways to play the technology’s ascent in popularity soaring. Notably, Nvidia , the chipmaker universally considered a way for investors to expose themselves to AI, has surged nearly 200% since 2023 began. NVDA .SPX,.IXIC YTD mountain Nvidia vs. the S & P 500 and Nasdaq Composite this year But several catalysts tied to AI could sour sentiment in the Nasdaq Composite ‘s mega-cap stocks, Brown said. Demand pull-forward could be one, as could Microsoft seeing less use than expected in large language models, he said. Nvidia seeing more double-ordering than anticipated is another example Brown pointed to. The technology-heavy Nasdaq has performed the best of the three major indexes this year, gaining more than 26% in 2023 as tech and other growth stocks rebounded. Brown noted the positive role the technology has played in improving market sentiment this year. He pointed specifically to how Nvidia helped better investor spirits in May after offering a strong earnings report and outlook . That marked a turn from March and April, when the banking crisis rattled the market. “AI saved the stock market this year, at an index level,” Brown said. He said Nvidia’s guidance in May “was like a switch flip.” Nvidia now has a market cap of more than $1 trillion, placing it in a prestigious club. Wall Street sees significantly more upside ahead even after Nvidia’s rally this year, with the average price target of analysts surveyed by LSEG implying the stock can climb another 45%.
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