![]() Orthodox asset pricing models suggest these wild gyrations reflect changing but rational assessments of future profitability. Shares in Chegg (CHGG.N) cratered earlier this month when the maker of study materials admitted that so-called large language models such as ChatGPT were eating into its market. ![]() Irish Finance Minister Michael McGrath last week unveiled plans for a new 90-billion-euro sovereign wealth fund, largely funded by a corporate tax windfall from tech giants such as Apple (AAPL.O) and Microsoft which are domiciled in the country.įor other companies, perceived vulnerabilities to AI can spell doom. ![]() The boom even has macroeconomic consequences. SocGen analyst Manish Kabra calculated last week that, excluding AI-related gains, the S&P 500 Index (.SPX) would be down 2% year-to-date. Indeed, enthusiasm about AI has become the one ray of light piercing the stock market gloom created by the record-breaking rise in U.S. ![]() Investors in Alphabet (GOOGL.O) added a cool $60 billion to the Google owner’s worth in a single day last week after CEO Sundar Pichai unveiled its new AI offering at the company’s annual I/O conference. Software giant Microsoft (MSFT.O) has gained almost $500 billion in market value since announcing in February that it was incorporating AI into its Bing search engine. Shares in Nvidia (NVDA.O), the world’s leading maker of chips used in creating AI, have surged more than 100% over the last six months. Since OpenAI released its ChatGPT chatbot last November, the steady flow of capital into all things AI-related has turned into a torrent. The first lesson is the most obvious: beware of bubbles. ![]() Behavioural economics, which studies how psychological, emotional, and social factors affect human decision-making, has some important pointers for those hoping to cash in on AI. But investors should pay closer attention to Tversky’s specialisation. “Me, I study natural stupidity.” The co-founder of behavioural economics, who died in 1996, did not live to see 2023, when more of his academic colleagues jumped on the AI bandwagon along with venture capitalists, corporate leaders, and stock jocks. LONDON, May 19 (Reuters Breakingviews) - “My colleagues, they study artificial intelligence,” the Israeli psychologist Amos Tversky once quipped. ![]()
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