FNBO CIO Says AI Boom Carries Both Growth Potential and Bubble Risk

Artificial intelligence may bring lasting technological change while also contributing to a capital investment bubble, FNBO Chief Investment Officer Rusty Vanneman said, as high U.S. stock valuations raise questions about whether future returns will justify current spending. The Shiller price-to-earnings ratio, which compares stock prices with inflation-adjusted earnings over a decade, is above prior peaks. Vanneman said investors do not need to determine whether the current market resembles 1998, 1999 or 2000. Major technology companies have financed much of their AI capital spending with earnings and cash flow rather than heavy borrowing, limiting one source of financial risk.

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