If an AI Bubble Crashes the Stock Market, Warren Buffett Says This Is the First Move Investors Should Make
If a bear market is coming, the right strategy is more important than ever.
Overview
Artificial intelligence (AI) stocks have fueled much of the stock market's growth over the past few years. The S&P 500 (SNPINDEX: ^GSPC) has surged by more than 88% over the past three years alone, while the tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) is up 111% over that period.
However, increased AI-related spending has some investors worried that revenue won't be able to keep up. According to recent research from Goldman Sachs strategist Ryan Hammond, AI users will have to spend at least $1 trillion per year for hyperscalers to generate enough returns on their investments to justify this spending.
Details
To be clear, this doesn't necessarily mean that a market crash is coming or even that we're in a bubble. But it does mean investors should keep realistic expectations and be careful about where they buy. And if an AI-driven bear market is on the table, this one investing move will be critical, according to Buffett.
Source
Originally published at www.fool.com.