Billionaire Investor Howard Marks Warns of AI Enthusiasm and Potential Market Bubbles

Chipmaker Nvidia Corp. has witnessed a significant decline in its stock value, along with several other artificial intelligence-linked stocks and exchange-traded funds (ETFs), in 2025. This downturn comes despite growing enthusiasm for the AI sector. Howard Marks, an expert known for his successful market predictions, has drawn parallels between today's AI enthusiasm and past market bubbles.

What Happened: In early January, Marks released his latest memo titled ‘On Bubble Watch’ and discussed the implications of AI in a podcast named ‘Behind the Memo – On Bubble Watch’ with Harry Whitelaw. He expressed his belief that the excitement surrounding AI has few historical precedents, leading to potentially inflated valuations.

Marks remarked, “The thrill of the new technology and the fear of missing out create a powerful combination. I've seen this pattern before, and it tends to lead to market bubbles.” His caution is rooted in the observation that unbridled enthusiasm for emerging technologies can cause investors to overlook underlying economic realities.

As predicted by Marks, AI-linked stocks have struggled in 2025. Despite the launch of DeepSeek, a new tool expected to heighten demand for AI solutions, the overall performance of the sector reflects a stark contrast to the previous year’s exuberance.

Stocks	YTD Performance	One Year Performance
Nvidia Corporation NVDA	-9.76%	46.42%
Apple Inc. AAPL	-1.01%	37.86%
Microsoft Corp. MSFT	-5.16%	-4.32%
Amazon.com Inc. AMZN	-3.75%	19.36%
Alphabet Inc. Class C GOOG	-9.71%	28.26%
Meta Platforms Inc. META	11.51%	34.13%
Tesla Inc. TSLA	-22.74%	55.76%
Palantir Technologies Inc. PLTR	12.92%	253.18%
Oracle Corp. ORCL	0.02%	45.59%

Additionally, AI-linked ETFs have also shown poor performance in 2025, reflecting the broader decline in technology stocks.

ETF Name	YTD Performance	One Year Performance
iShares US Technology ETF IYW	-3.06%	14.53%
Fidelity MSCI Information Technology Index ETF FTEC	-3.80%	13.40%
First Trust Dow Jones Internet Index Fund FDN	1.09%	20.90%
iShares Expanded Tech Sector ETF IGM	-2.19%	16.18%
iShares Global Tech ETF IXN	-2.50%	9.97%

Why It Matters: Howard Marks, who previously predicted the dot-com bubble, noted several warning signs in today’s market in his memo. Key concerns include high stock valuations, the hype surrounding AI, and a strong concentration in tech stocks. He referenced research from JP Morgan Asset Management suggesting that periods of excessive valuation often precede disappointing long-term returns. Marks emphasizes the importance of being cautious in investment decisions, given the elevated risks associated with current market conditions.

Price Action: On a different note, both the SPDR S&P 500 ETF Trust SPY and the Invesco QQQ Trust ETF QQQ have managed to rise in value, with the SPY increasing by 1.56% to $594.18, and the QQQ showing a similar gain of 1.56% to reach $508.10, as reported by various financial data sources.

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investor, AI, stocks, market