"Woodstock" joins the AI bubble debate: The bubble does not yet exist, but AI stock valuations may face a "reality check."

According to the Zhitong Finance APP, Ark CEO Cathie Wood stated on Tuesday that she does not believe there is a bubble in the current artificial intelligence (AI) market, but warned that the valuations of AI-related stocks may soon face a "reality check."

During the Future Investment Initiative Conference held in Riyadh, Saudi Arabia, Wood mentioned that as interest rates begin to rise, "the market will experience a shock." She pointed out, "We will see such a moment in the next year—market discussions will shift from rate cuts to rate hikes." "People think innovation is inversely related to interest rates, but historically, that has not been the case. I want to dispel that misconception. However, we still believe the market will face a reality check."

Nonetheless, Ark Invest, led by Cathie Wood, continues to engage in a series of significant investment operations focused on innovation and technology stocks. Notable purchases include stocks like Robinhood (HOOD.US), Netflix (NFLX.US), and Baidu (BIDU.US). At the same time, the fund has also made some reductions, such as in Shopify (SHOP.US) and AMD (AMD.US) stocks. Additionally, the fund sold 4,064 shares of Palantir Technologies (PLTR.US) in October.

It is worth noting that recently, as valuations of AI-related companies have soared, large-scale AI investments have surged, and the AI ecosystem has become increasingly closed-loop, concerns about an AI bubble have resurfaced. Opinions on Wall Street are divided.

For example, a fund manager survey conducted by Bank of America in October showed that as AI concept stocks have experienced a strong rally this year, the proportion of global fund managers who believe the sector has entered a bubble has reached a historic high. In this survey, about 54% of respondents indicated that technology stocks are currently overvalued.

Lauren Taylor Wolfe, managing partner at Impactive Capital, pointed out that the AI industry is in a bubble that will ultimately burst. She compared the current AI investment frenzy to the internet bubble of the late 1990s, stating, "We are absolutely in an AI bubble. The bubble will burst. I don't know the exact timing or the extent of the burst, but many will suffer significant losses." Her core concern lies in the severe disconnect between investment and returns in the AI field, "Trillions of dollars are being planned for investment in AI, while the seven tech giants only generate hundreds of billions in free cash flow." She questioned the financial sustainability of current AI investments: "Who can prove that they can generate trillions of dollars in profits over the next five years? This is simply not achievable; it doesn't hold up mathematically."

However, Goldman Sachs stated that while they see some concerning factors, they generally believe that the U.S. technology sector is not currently in a bubble (at least not yet). The firm's strategists noted that while some characteristics of the current period are similar to past bubbles, and the cyclicality of trading is worth monitoring, public market valuations and capital market activity levels are still below the peaks seen during the internet bubble. They also pointed out that the "seven tech giants" continue to generate excess free cash flow, engage in stock buybacks, and pay dividends, behaviors that were rare during the internet stock bubble In addition, Goldman Sachs emphasized that opportunities in the technology sector still exist, but diversification is a wise move.

NVIDIA (NVDA.US) CEO Jensen Huang rarely responded positively to market doubts about the "AI bubble" at the GTC conference held in Washington on Tuesday, stating that the AI industry has reached a turning point where "customers are willing to pay real cash for models," and the commercial returns of expensive computing infrastructure have emerged, thus forming a "positive cycle."