Chief investor urges people to quit chasing AI, says it’s not a matter of if but when it 'breaks’ — how to prepare

Core Viewpoint - The current market frenzy around AI is likened to a bubble, with significant concerns about overvaluation and potential market corrections [1][2][4]. Valuation Concerns - Nvidia's market value has surged twelvefold to $4.4 trillion since early 2023, while Palantir's valuation has increased twenty-eight-fold to $420 billion [2]. - CoreWeave's valuation reached $60 billion with only $1.2 billion in quarterly revenue, indicating a disconnect between valuation and actual financial performance [2]. Market Dynamics - The technology sector constitutes 34% of the S&P 500, surpassing the peak concentration observed in March 2000, raising alarms about potential market instability [4]. - Predictions suggest that AI stocks could experience drastic declines, potentially dropping 40% in value daily, reminiscent of the dot-com bust [4]. Circular Financing Risks - Increasing interconnections among major AI players, such as Nvidia's plan to invest up to $100 billion in OpenAI, create a self-reinforcing feedback loop that could exacerbate market volatility [5]. - Historical parallels are drawn to the late 1990s, where startups engaged in circular deals around advertising and cross-selling, leading to similar market dynamics [6].