Chipmaker Nvidia Corp., along with other artificial intelligence-linked stocks and exchange-traded funds, have plunged in 2025 despite the growing enthusiasm surrounding the sector. This expert who predicted the dot-com crash compares the AI-linked enthusiasm to instances that “sometimes leads to bubbles”.
What Happened: After the release of his latest memo, ‘On Bubble Watch,’ in early January, Howard Marks, the co-founder and co-chairman of Oaktree Capital Management, spoke about how AI is poised to change the world in a podcast titled ‘Behind the Memo – On Bubble Watch’ with Harry Whitelaw.
According to Marks, the novelty of AI places no limits on the potential and enthusiasm surrounding the sector. Having “no historical” base also aids to the unending enthusiasm for AI.
Highlighting these conditions, Marks said, “That's a great precursor for the kind of enthusiasm that sometimes leads to bubbles.”
“The thrill of the new thing and the fear of missing out is an incredibly powerful combination. I've seen it at work many times and it'll never stop, in my opinion,” he added.
Broadly, the AI-linked ETFs have also largely underperformed in 2025.
Marks also highlights research from JP Morgan Asset Management showing that high valuations like today’s often precede lackluster returns over the following decade. He cautions that investors should not ignore these warning signs, especially the elevated market valuations. Essentially asking to proceed with caution.
Read Next:
Photo courtesy: Oaktree Capital Management
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
To add Benzinga News as your preferred source on Google, click here.
