The recent correction in technology stocks should not be mistaken for the end of the artificial intelligence trade. The more important question is not whether AI-linked stocks are falling, but whether the investment in AI infrastructure and applications is slowing. And, by that measure, the cycle remains firmly intact, says Samir Arora, founder of Helios Capital.
Arora argues that investors are conflating two very different things: the performance of AI-related stocks and the spread of AI itself. The latter, he believes, is continuing, with some of the world’s largest technology companies not only maintaining their investment plans but stepping them up.
“When Google, Meta and the others say we will invest $200 billion or $250 billion, and their stock prices fall, is that a failure of US AI? Or does that mean the real spenders on AI continue to believe in it, perhaps even more than they did before?” he asks.
Arora cautions against celebrating a fall in US technology stocks on the assumption that the money will automatically flow into Indian equities or that Indian IT services companies will become beneficiaries of a failed AI trade.
That, he says, is a misleading way to read the market. “AI trade, whether the stock price goes up or down as of now, is not failing,” he says. By AI trade, he means the continuing investment and adoption of the technology, not the day-to-day movement in the share prices of companies associated with it.