Tech investor Brad Gerstner, Chair and CEO of Altimeter Capital, has compared the current artificial intelligence (AI) boom to the rise of the internet in the late 1990s. He believes that AI is a “supercycle” that will have a significant impact on various industries. However, Gerstner also acknowledges that there may be conflicting sentiments and uncertainties surrounding AI, just as there were with the internet boom.
This year, AI has been dominating headlines and creating a buying frenzy on Wall Street. Major enabler Nvidia even reached a market cap of over $1 trillion. ChatGPT, a chatbot with human-like responses, became the fastest-growing software in history and gained global acclaim.
Gerstner points out that, similar to the overpricing in the short term during the internet boom, there may be some overestimation of AI’s impact in the near future. However, he believes that AI will ultimately have a more significant impact than the internet, mobile, and cloud software.
In another sector, Kathleen McCarthy, global co-head of real estate at Blackstone, highlights the opportunities in the under-supplied market of student housing. She emphasizes that there is insufficient housing supply to meet the growing demand in areas with job population or student growth. Despite a period of rapid rent growth, McCarthy believes that economics for landlords in the student housing niche remain strong, particularly given the high cost of homeownership.
As environmental, social, and governance (ESG) investing gains popularity, UBS Asset Management President Suni Harford advises investors to focus on the investment opportunities in the space rather than the politics surrounding ESG. She believes that there are tremendous trends in the ESG space that are open for investment. Even if there are potential threats to the Investment Reduction Act (IRA) due to future elections, Harford believes that the provisions promoting investment and growth will likely remain in place.
Mark Delaney, Chief Investment Officer and Deputy CEO of AustralianSuper, highlights China’s dominance in the electric vehicle (EV) market. He mentions his experience of being driven in an autonomous EV on a Chinese highway and notes that China is heading down the EV path and will be a major player due to its position as the world’s largest car market.
Investment managers are also watching the capital expenditure (capex) boom, as S&P 500 companies have increased capex for the ninth straight quarter. Tina Byles Williams, founder, CEO, and Chief Investment Officer of Xponance, sees capex recovery as a global story driven by factors such as offshoring, inshoring, and the green transition. However, Edwin Cass, Chief Investment Officer of CPP Investments, cautions that capex could be a lagging indicator and emphasizes the need to monitor its sustainability.
In terms of market outlook, TCW Group CEO Katie Koch warns of a coming recession and advises investors to prepare by making conservative investments such as Treasurys, mortgage-backed securities, and cash. She believes that higher rates will eventually bring some pain to the market.
Furthermore, Delaney and other international investing executives urge caution when interpreting news about China. Despite the geopolitical rivalry between the US and China, Delaney advises against believing everything one reads, pointing out the need to have first-hand experience and on-the-ground insights.
Overall, these insights from industry experts highlight the significance of AI and ESG opportunities, the potential in under-supplied markets, and the need to watch for economic factors such as capex and potential recessions. They also emphasize the importance of considering first-hand experiences and on-the-ground insights in assessing investment opportunities.