Investors are too optimistic about the near-term prospects of AI, Vanguard said.
"This is double the annualized rate of the 1920s, when electricity lit up the nation," Vanguard wrote.
AdvertisementBut Vanguard global chief economist Joe Davis thinks expectations are too high, and says that stocks are overvalued even if the AI boom plays out as anticipated.
For context, the S&P 500's trailing one-year earnings growth rate through the second quarter of 2024 was 10.9%, according to FactSet data.
That's probably not going to happen, which means we're unlikely to experience an AI-driven economic boom in 2025," he said.
Persons:
—, Joe Davis, It's, Davis, BlackRock
Organizations:
Vanguard, Service