Bank of America says AI is in a 'baby bubble' like the dot-com era

Per Bloomberg

Strategist Michael Hartnett of Bank of America has given his statements regarding AI. He recently likened it to that of the dot-com bubble, saying that it was in a "baby bubble."

With all the hype around AI, especially ChatGPT, other companies are trying to get into the buzz by either providing their own AI solutions or integrating ChatGPT within their existing solutions. While artificial intelligence has also caused growing fear in the industry, especially the tech sector, Bank of America's Michael Hartnett thinks it is forming a bubble.

It's important to note that Hartnett gave a close prediction regarding recession fears in 2022. During that time, he predicted that recession fears would result in a stock exodus.

Hartnett gave the recommendation to sell the S&P 500 at 4,200.,

Now, BofA said that AI was in a "baby bubble," citing lessons from 1999 when internet stocks crashed. Hartnett specifically said that AI, along with tech in general, was forming a bubble.

Hartnett also said that US bond yields could rise above 4% should the Fed "mistakenly" place a pause on its rate hike.

Hartnett: "... if so we most certainly ain’t seen the last Fed rate hike of the cycle,”

In April, Bank of America also cautioned about money market funds, saying they were the "next bubble." This statement came at a time when money market fund assets reached a record $5.11 trillion.

In March, the bank also noted that the next stock market bull run wouldn't happen until the Fed is forced to bail out the US government. The bank said that high rates would result in a massive increase in interest payments on America's debt worth $31 trillion.

The bank also noted during that time that they expected US government debt to soar by over $21 trillion over the next ten years.

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