AI Is the Talk of Davos. Is It Time to Sell?

livemint.com:

The mood of the global elite meeting in Davos, Switzerland, is a useful indicator for investors—as long as they do the opposite. When the elite are depressed, buy. When they’re positive, sell.

When they’re focused on crypto, as in 2021, get out. This year it was impossible to move in the snow-blanketed resort without having artificial intelligence pushed at you. Does this mean the AI excitement is overdone? Anything AI-related boomed last year following the launch of ChatGPT, so Davos Man (and increasingly Woman) is a little late to the party.

Investors thinking about buying now have also missed some stunning gains, as AI stocks soared from January to June, and some of the biggest have carried on up, albeit at a much slower pace. I’m inclined to think it is hyped, as I said in June; since then there has been more discrimination by investors, with some of the smaller AI stocks pummeled. But then I’m always cynical about the crowd.

To make a proper assessment, we need to consider both the reality of AI and what is already priced in. “It is real what is happening in AI right now," said Nicolai Tangen, head of Norway’s $1.5 trillion sovereign-wealth fund. “You speak to Sam Altman and you see what’s happening to their business, and you speak to Microsoft, and so it is happening." But in spite of this he has sold off the fund’s overweight position in Microsoft and the rest of the Magnificent Seven big tech stocks.

The reality distortion field in Davos is strong, but companies are increasingly excited about the prospects for productivity gains in their businesses from using AI. BlackRock Chief Operating Officer Robert Goldstein is one of the most bullish. He said large language models—the technology behind ChatGPT—would have a