AI becomes the “Magic Fix” while America places “a big bet” on being a bubble, the market veteran warns

In a Financial time On Sunday, the column, the market veteran stressed that the “boom-bust cycle of immigration” that the United States now knows is unprecedented on a scale, going from a net gain of more than 3 million in 2023 to an expected net of only 400,000 this year. The drastic strangulation of the active population could reduce the American growth potential by more than 20%.

“However, the response to this risk is also increasingly a shoulder. The AI ​​will make human work less necessary anyway,” joked Sharma.

Meanwhile, the United States debt / GDP ratio is already 100% and should continue to gallop higher, going beyond the Second World War record in the coming years.

But again, the AI ​​could come to the rescue by sufficiently propeling economic growth to stabilize the debt. The global bond market even seems to be prices in this scenario, said Sharma, stressing that yields are increasing for Japan, France and the United Kingdom, even if they have smaller budget deficits than the United States.

“The main reason why AI is considered a magic solution for so many different threats is that it should give a significant boost to productivity growth, especially in the United States,” he added.

In addition to labor and debt problems, AI could even mitigate the risk of inflation, including pricing pressure, allowing companies to increase wages but always maintain stable prices, Sharma said.

The expected benefits of a productivity boom are not completely eccentric. The Congressional Budget Office estimated earlier this year that the boost of productivity growth of 0.5 percentage points each year for 30 years could publicly hold 113% of GDP by 2055, instead of 156%.

And the United States has in fact experienced greater growth in productivity in recent years than other developed economies, stirring in media threw among investors that lead will widen.

The story of the AI ​​of America helped world investors overcome the shock of President Donald Trump’s trade war prices and the “Liberation Day”, which sparked a sudden exodus of the US markets. But the money quickly returned, and Sharma said that foreigners plowed $ 290 billion in US equity in the second quarter and now hold 30% of the market.

“In a way, America has therefore become a great bet on AI,” he said.

Excluding AI actions, European markets have in fact beaten the United States this decade and outperformance is spreading to other sectors.

“What suggests is that the better book for the United States, or its economy and its markets will lose the leg on which they are held,” said Sharma.

He is not the only voice that sounds the alarm. Lisa Shalett, director of investments for Morgan Stanley Wealth Management, wrote on September 29 that “it is difficult not to see yet … a boom motivated by a story of a note”. Since the launch of Chatgpt, Shalett has noted, which it considers “actions of Data Center-Ecosystem” has represented around 75% of S&P 500 yields, 80% of profits and 90% of capital expenditure growth. “It is difficult to ignore market dependence on AI Capex,” she concluded.

For the moment, Wall Street seems happy to get on the wave. On Monday, the advertisement of OpenAI according to which he participated in the manufacturer of Puces AMD sparked another stock market rally.

Analysts are also hiking price objectives for other Hot IA games like Nvidia as well as the Global S&P 500. And although the recent Record summits have fueled concerns concerning a bubble, certain measures indicate that the AI ​​boom is not yet at Dotcom levels.

Others still see the conditions become more frothy. Evercore ISI analyst Julian Emanuel said in a note on Monday that he now saw 30% of S&P 500 to 9,000 dimensions at the end of next year in a “bubble scenario”, from 25% ratings a few weeks ago. Its basic case is that the index reaches 7,750 at that time, representing a gain of 15% compared to current levels.

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