If You Fear the 'AI Bubble,' You Might Lose Money

Editor's note: Warnings about bubbles make a lot of investors nervous. And just last week, that's what we got from one of the most important leaders in artificial intelligence ("AI"). But according to Vic Lederman, publisher of our corporate affiliate Chaikin Analytics, comments like these don't always signal the end of a rally. In today's issue – adapted from the free Chaikin PowerFeed daily e-letter – Vic explains why investors should take this AI warning with a grain of salt...

Even Sam Altman thinks folks are getting "overexcited" about AI...

Altman is the CEO of AI pioneer OpenAI, the creator of AI chatbot ChatGPT.

Last week, Altman spoke to a group of reporters about AI. During the chat, he said...

Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes.

Is AI the most important thing to happen in a very long time? My opinion is also yes.

More specifically, Altman suggested that AI could be in a "bubble" phase. And as he told the reporters...

When bubbles happen, smart people get overexcited about a kernel of truth.

The CEO of the most important AI company is making a bold statement: Investors are running up these stocks too much.

On its own, Altman's comment might make you want to start looking for the exits.

But as I'll show you today, this isn't the first time a CEO has talked about overexcited investors. And if you listened last time, you would've missed an incredible rally...

In May 2020, Elon Musk told the world that Tesla's (TSLA) share price was too high. And investors listened...

They dumped their Tesla shares... And the electric-car maker's stock quickly fell 10%.

But folks, this idea ties into the mechanics of bubbles, manias, and major bull runs.

Sure, Musk is contentious. But don't let that fool you...

Selling just after Musk's comment was a fatal investing mistake.

Tesla's value fell around 17% through mid-May 2020. But then, the stock bounced back...

By the end of 2020, it had become the year's top-performing stock. It soared nearly 700% that year.

Musk may have been right that the market had overvalued the stock. But that wasn't the end of the story.

Investors who sold Tesla missed one of the decade's biggest moneymaking opportunities.

That brings me to my point...

Sam Altman is just the latest person to hint at a bubble in the market today.

You're going to hear a lot more talk about valuations in the coming months. The cries that the market is "too high" will only get louder.

Some of the smartest people in the world will ask, "How could share prices possibly rise from here?"

In fact, that question is possibly the most important question in finance right now. And it's one that Chaikin Analytics founder Marc Chaikin and I addressed on camera yesterday.

We sat down together for Marc's first "Ask Me Anything" Open House event.

We've never done anything like this before. And because of that, I've urged Marc to give viewers a special gift...

Put simply, I want everyone who checks it out to have unprecedented access to Marc's work. So we've put together an incredible offer that you can't afford to miss.

If you missed this event, I hope you watch our recording... to get in-depth answers on the AI run-up and more.

And for now, when you hear folks like Altman warning about bubbles, remember Elon Musk in 2020. Warnings may spark short-term pullbacks, but they won't erase the powerful forces driving the larger bull run.

The real risk isn't staying invested during periods of "overexcitement." It's finding the exit too quickly... and missing the kinds of gains that only come once in a generation.

Good investing,

Vic Lederman

Editor's note: Yesterday, Marc Chaikin hosted his first-ever "Ask Me Anything" event. As questions poured in from worried investors, Marc didn't hold back... He revealed which fears are overblown – and which ones could derail retirement accounts. Most importantly, he gave an urgent update to his 2025 market forecast.

If you've been uneasy about the market's new all-time highs – or the possibility of a dot-com-style bust – you'll want to see his answers on replay.