Mike Novogratz, CEO of Galaxy Digital, stated at the Greenwich Economic Forum that artificial intelligence is 'the biggest bubble of our lifetime', while urging investors to enter the market. His reasoning is based on timing, not that the bubble is harmless.

He asserted that bubbles do not end in the current manner, claiming to know how bubbles end: they end violently, and it is not yet violent enough now. His valuation judgment is that AI-related stocks are still attractive based on price-to-earnings ratios and cannot be considered expensive. For those who are short, he suggested that if they haven't invested in AI yet, they might as well go home and put their heads in a bucket of ice water.

He dismissed the possibility of a policy slowdown. The US-China competition makes it difficult for Washington to slow down AI, even to the pace that builders themselves desire. He acknowledged the rising cost of long-term borrowing but believes it is not enough to interrupt this rally. On the day of his speech, the S&P 500 index reached a new high, with AI-related stocks being the main driving force, and Nvidia's market value approaching $6 trillion.

On the other side, some have called for a halt. Ray Dalio, founder of Bridgewater, referred to AI in Singapore as a typical bubble, claiming it is close to bursting. Bank of America strategists suggested using index derivatives for hedging. The Chief Investment Officer of DBS stated that Nvidia's forward P/E ratio is about 17 times, still far from the bubble range. Novogratz stands on the side of 'it is a bubble, but not yet at the end stage', not on the side that valuations are already expensive.

This is not the first time he has used the same phrase. In November 2017, he described cryptocurrencies as 'the biggest bubble of our lifetime' while maintaining a bullish outlook; Bitcoin peaked the following month and then fell over 80%, with Galaxy Digital recording a loss of $273 million in 2018. This time he has applied the same phrase to AI stocks, while the company's main business remains crypto trading, asset management, and infrastructure.

This is a call to action driven by events, not a new fund issuance. The buyers are funds willing to increase their positions in AI stocks on the premise of acknowledging the bubble, while the sellers are those treating Dalio's 'close to bursting' as a reason to reduce positions. Beneficiaries include chipmakers, computing power, and AI-weighted stocks already included in index gains; those under pressure include short positions and hedgers, as well as those who remember the crypto bubble as a template for exiting. The flow of money remains in public stocks, not leaving the stock market for safe havens.

Source: Public information