Raymond James Senior Portfolio Manager Kim Inglis discusses whether today’s AI enthusiasm resembles a bubble, what investors often misunderstand about the tech sector, and the real long-term benefits AI could deliver. She also explores potential sources of volatility around the theme and shares her outlook on where markets may be headed next.
AI, Tech Myths, and the Market Outlook
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Interviewer:
Joining us now to talk about markets, we have Kim Inglis with Raymond James. Well, Kim, great to have you back with us.
Kim Inglis:
Thanks for having me.
Interviewer:
So first starters, Kim, there's been a lot of speculation and talk about whether or not AI could be in a bubble. What are your thoughts there?
Kim Inglis:
Yeah, I feel like every time you open up the news, you see headlines on that. But I would actually argue that today is fundamentally different from the dot com era. I mean, if you think about it during the 1990s, you had companies that were going public with pretty much no revenue, no business plan, fast forward to today, and you've got well established businesses that are in the tax sector. We're also quite different right now from just a technological perspective. US households as an example, 97% of them have a computer, whereas during the peak of the dot com era, only 51% did, and the internet's the global population. Almost 70% has access to the internet, whereas it was 6% during the dot com era. And then in terms of the rally that we have seen in the space, there's been much broader participation whereas during dot com, it was quite narrow. And then finally, I would say that the, you know, one thing that's a good sign is that there hasn't been a lot of tech IPOs. And if we were truly in a frenzy, we would see them left, right, and center coming at you. And we're just not right now.
Interviewer:
Would you say there are any misconceptions floating around right now about Big Tech?
Kim Inglis:
Yeah, I would say the most common one would be the fact that a lot of people think that any tech company is an AI company and that's just not the case. I mean, big tech in particular is, you know, a lot of those companies are much more diversified. They've got broad business platforms. You consider say Apple, Microsoft, Google, Amazon. I mean, they're involved in the AI space, but they're also involved in hardware, software, devices, you know, advertising, a whole bunch of different business segments. So I think it's important for investors to remember that Big Tech is not solely AI.
Interviewer:
What do you see as the biggest benefit of AI, Kim?
Kim Inglis:
Yeah, AI definitely solves a need. And I think that that's truly the biggest benefit, particularly when it comes to productivity. And if you look globally around the world, you're seeing labor supply falling as an example. So productivity is a bit of an issue and AI helps to solve for that. And AI has benefited virtually every industry and across the entire business platform. You're seeing it across automation, decision support. Personally, you open up, you know, Google to look for something and AI is in there. You go to the doctor's office, they're using AI. It's in virtually every facet of your life now. And I think at the end of the day, it's truly a foundational technology. It's driving efficiency and innovation really around the whole world.
Interviewer:
Now, what could drive volatility in the sector and with AI specifically?
Kim Inglis:
Yeah, so with AI and the tech sector in general, I don't think it's surprising to see volatility. It's a sector that's done really well. Any sector company market does well. It doesn't go up in a straight line. So having bumps along the road is very healthy and natural part of things. The technology sector has seen volatility around deep-seek, a while back. More recently, you've seen volatility around reports on overspending. These are all bumps along the road. I think that with technology and AI in particular, this is more than just a cycle. It's more of a technological revolution. I mean, this technology is helping, it's really becoming a transitional period for the global economy, similar to the industrial revolution, really. Are there gonna be corrections along the way? Definitely, are there pockets of speculation there for sure, but that ends up highlighting why as an investor, you wanna make sure that you're diversified in your portfolio, you're focused on quality and you're diversified, especially within your tech exposure.
Interviewer:
Finally, Kim, how do you feel about the markets and big picture moving forward?
Kim Inglis:
Yeah, so I think that it's important for investors to remember markets. What happens today isn't so concerning to the market. The market is more focused on the future and future expectations, and those expectations right now are pretty good. You look at, for example, this fourth quarter, inflation is expected to peak and then come down, GDP growth is expected to bottom and then rise, so that's obviously, those are generally good things. And then we're also seeing rate cuts, which tend to be a good thing for both stock and bond markets, so those are good things. And then if you think about it, no bull market has ever ended without a huge surge in investor confidence and a huge surge in M&A and IPO activity, which as I just said, we're not seeing a significant amount of, so those are all some pretty decent things for the market.
Interviewer:
Well, Kim, always great to have you with us. Thanks again.
Kim Inglis:
Thanks for having me.
Interviewer:
And thank you for watching. Once again, that was Kim Inglis with Raymond James, and I'm your host, Jenna Dagenhart with Asset TV.