Veteran investor Howard Marks, co-founder of Oaktree Capital Management (OAK), believes that the current enthusiasm for artificial intelligence doesn’t yet qualify as a market bubble. In an interview with CNBC’s Sara Eisen, Marks explained that while valuations are undeniably high, they are not irrational. He clarified that “expensive and going down tomorrow are not synonymous,” meaning that elevated prices alone are not a sign of a bursting bubble.
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Marks, who is well-known for his market commentary, pointed out that psychological excess is what defines a true bubble, which he calls a “temporary mania.” And although AI stocks have surged and investor excitement is clear, he doesn’t see signs of that extreme mindset yet. According to him, the belief that there’s “no such thing as a price too high” hasn’t occurred, which was typically a key ingredient in past bubbles.
Moreover, Marks compared today’s AI surge to the internet boom of the late 1990s. Although the internet ended up changing the world, most internet and e-commerce companies that went public during that period became worthless. As a result, he warned that similar thinking, such as backing any company with even a slim chance of huge returns, is “bubble psychology.” Still, he believes that the AI rally hasn’t reached that point, noting, “It’s not manic behavior,” even if expectations for AI remain very high.
Is QQQ Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on the Nasdaq-tracking Invesco QQQ Trust (QQQ) ETF based on 91 Buys, 11 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average QQQ price target of $674.70 per share implies 12% upside potential.
