AI hype is real, but a Nobel-winning economist warns profits aren't guaranteed

Core Insights - Investors are heavily investing in AI, but there are concerns about the actual economic returns and potential risks associated with this trend [2][3][5] Group 1: Economic Outlook on AI - Richard Thaler expresses skepticism about the promised economic returns from AI, stating that there will be both winners and losers, but it is uncertain who they will be [2][3] - Thaler manages approximately $30 billion in small-cap assets and emphasizes the unpredictability of AI's economic impact [2][4] - The market is currently pricing AI-related stocks at record highs, raising concerns that profits may be overestimated or delayed [5] Group 2: Historical Context and Comparisons - Thaler draws parallels between the current AI hype and past technological revolutions, such as the introduction of the iPhone, which transformed access to information but did not guarantee immediate profits [4] - He recalls Amazon's early struggles in the late 1990s with its bookselling business, which only became profitable later with the success of Amazon Web Services (AWS) [4] Group 3: Market Sentiment and Behavior - The market's resilience amidst tariffs and policy uncertainty is puzzling to Thaler, who notes that it may be driven by sentiment rather than fundamentals [5][6] - He describes the market as a "voting machine," suggesting that fear of missing out (FOMO) could be influencing stock prices more than actual economic indicators [6]