InvestingPro’s Fair Value model captures 63% gain in Steelcase ahead of acquisition
Investing.com -- Federal Reserve Vice Chair Philip Jefferson said Friday that the current surge in artificial intelligence stocks is unlikely to mirror the dot-com boom and bust of the late 1990s, primarily because today’s AI companies have established earnings.
Speaking at a Cleveland Fed conference, Jefferson noted that AI-related firms differ significantly from the speculative internet companies of the dot-com era. He pointed out that the financial system remains "sound and resilient" amid investor enthusiasm for AI stocks.
Get more stock picks by Wall Street analysts by upgrading to InvestingPro - get 55% off today
A key distinction Jefferson highlighted is that AI companies have not heavily relied on debt financing, which "may reduce the extent to which a shift in sentiment toward AI could transmit to the broader economy through credit markets."
However, Jefferson acknowledged that if future AI infrastructure investments require more debt as some analysts predict, "leverage in the AI sector could increase—and so could the losses if sentiment toward AI shifts. I will watch this developing trend closely."
A recent Federal Reserve report revealed that approximately 30% of respondents consider a potential turn in sentiment against AI as a significant risk to both the U.S. financial system and global economy.
Jefferson added that while artificial intelligence may transform the world in a dramatic and potentially "bumpy" way, it remains too early to determine its exact impact on the labor market, inflation, and monetary policy.