Two-thirds of major US investors worried about AI bubble

Artificial intelligence (AI) continues to be seen as one of the market’s main long-term bets, but investors still see relevant risks of exaggerated valuations and a possible bubble in the short term. This is what a survey released this Monday (19) by Janus Henderson shows with 1,000 high-income and high-net-worth North American investors.

According to the survey, 67% of respondents said they were concerned about a possible AI bubble or a technology-driven market correction in the next 12 months. Still, 61% believe that artificial intelligence will have a positive impact on market returns over the next five years.

The main concern raised by investors is that AI does not meet the expectations created by the market, cited by 28% of respondents. Next come fears linked to bias, misuse or insufficient safeguards (24%) and the risk of overvaluation of investments linked to technology (19%).

Despite short-term fears, almost half of investors (48%) said they were “very” or “moderately” confident that companies heavily exposed to AI will be able to deliver superior returns in the long term.

Among millennials, this percentage rises to 76%, showing an important generational difference in relation to older investors.

“Skepticism about AI is understandable, but investors run the risk of not being able to distinguish valuation noise from long-term structural changes,” said Denny Fish, portfolio manager on the global Technology and Innovation team at Janus Henderson. “There will be no greater secular topic than AI in our generation.”

The survey also showed that investors remain wary of using AI for financial decisions. The main barriers highlighted were concerns about possible biases or conflicts of interest in recommendations (75%), data privacy and security (74%), preference for traditional methods (73%) and lack of trust in AI-generated recommendations (72%).

Even so, acceptance grows when AI is used as an operational support tool. According to the study, 87% of investors said they felt comfortable or indifferent to the use of technology by financial advisors to create educational materials or perform administrative tasks.

Discomfort increases when AI enters more sensitive activities: 40% said they would be uncomfortable if advisors used AI to automatically respond to messages and emails, while 33% said they rejected investment recommendations made by technology.

The demand for transparency also appeared as one of the main points of the survey. Around 79% of respondents said they would be bothered if they discovered that their advisors were using AI without notifying clients in advance, while 85% said they considered the human advisor as ultimately responsible for guidance or materials produced with the support of technology.

“While it has the potential to be a valuable tool in advisory practices, advisors will need to implement AI strategically and thoughtfully,” said Matt Sommer, director of the Specialty Advisory Group at Janus Henderson. “The demand for human-led decision-making and personal connection will not be replaced by artificial intelligence.”