a person who has a lot of money and is called Ed Yardeni thinks that people are putting too much money into companies that use artificial intelligence (AI). Just like with balloons, when you keep blowing them up, they can suddenly pop, Ed Yardeni thinks that investing lots of money into AI might end up causing problems for the companies and people who are involved. He is warning everyone to be careful with their money and how they spend it on AI related things. Read from source...

In the article titled "AI Has 'The Hallmarks Of An Inflating Bubble,' Warns Veteran Wall Street Investor", the author appears to be presenting a cautionary warning about the potential pitfalls of investing in AI startups. However, the arguments presented in the article are not always logically consistent, and there are instances where biases and irrational arguments come into play. For example, the author notes that many AI startups have yet to turn a profit, yet they continue to attract substantial funding from venture capitalists. While this may indicate a risk, it is not a clear-cut sign of an "inflating bubble." Additionally, the author relies on emotional language and exaggerations to make their point, such as comparing the potential of AI to the discovery of agriculture and the industrial revolution. Overall, the article would benefit from a more objective and logical analysis of the risks and potential of investing in AI startups.

Bearish
Reason: The article suggests that the AI market boom could have characteristics of an inflating bubble, with overinvestment risks. Wall Street veteran investor Ed Yardeni warns that "big bucks chasing the AI dream" indicates potential pitfalls of overinvestment. Furthermore, hundreds of small AI companies have yet to turn a profit.

From the article titled 'AI Has 'The Hallmarks Of An Inflating Bubble,' Warns Veteran Wall Street Investor,' by Piero Cingari, Benzinga Staff Writer (July 4, 2024).

1. Overinvestment risk in AI startups: Wall Street veteran investor, Ed Yardeni warns that the AI market boom indicates bubble-like characteristics. The risk lies in big bucks chasing the AI dream, indicating substantial funds directed toward companies leveraging AI technology. In the past three years, $330 billion has been invested in 26,000 AI startups, a 66% increase from the $200 billion spent on 20,350 startups from 2018-2020. This year alone, generative AI deals attracted $21.8 billion, a fivefold increase from 2022.

2. Small AI companies struggling to turn a profit: Hundreds of small AI companies have yet to turn a profit. While there is widespread adoption of AI expected to enhance productivity and economic growth, many AI newcomers have yet to generate earnings.

3. Semiconductor industry comparison: The semiconductor industry saw only 0.2% earnings growth in 2023, but is projected to grow earnings by 47.5% this year and 38.8% in 2025, according to Yardeni's estimates.

4. AI startups running out of funds: Some companies, including Stability AI, are reportedly running out of funds and facing layoffs and CEO departures. This may cause a domino effect on the overall industry if AI startups run out of cash and suppliers see AI-related revenues dry up quickly.

5. Feasibility of doubling global GDP in a decade: While Yardeni predicts that AI will significantly boost productivity and help global GDP grow 7% annually, doubling within a decade is quite a claim, according to Yardeni.