Oak Tree Capital's Marks: Investors have underestimated the impact of AI

Artificial intelligence is making the world unprecedentedly unpredictable, and most investors have yet to realize the depth of this impact. Howard Marks, co-founder of Oaktree Capital Management, said at a New York capital markets industry conference on Tuesday, "The influence of AI is accompanied by its unpredictability. It's far from enough for investors to formulate strategies based solely on their judgment of future trends." He cited Block, owned by Jack Dorsey, which last month announced layoffs of 4,000 employees—about half its workforce—as an example, directly pointing out the market's severe underestimation of AI's impact. Marks believes that facing fundamental business model risks brought by AI, holding equity in AI-related companies is preferable to providing debt financing. Investors should participate as owners, not fixed-income investors. AI's unpredictability: Both power and risk In an interview with Bloomberg TV anchor Lisa Abramowicz, Marks said, "The power that gives AI its significance likewise endows it with elusive uncertainty—whether it's what it will do, won't do, or to what extent it will replace human jobs." Marks backed his views with concrete data. He mentioned that Block, owned by Jack Dorsey, last month announced layoffs of about 4,000 employees, roughly half its workforce, and questioned, "How many people worldwide truly understand the significance of this?" "Most people in the investment community decide their course of action based on their judgment of the future," he said. "That is not enough." Marks also pointed out that the rise of AI has exacerbated investors' concerns over the lack of transparency in the private equity markets. Historical patterns of new technology bubbles Having witnessed many cycles of boom and bust, Marks remains cautious about the market frenzy triggered by new technologies. He said, new things always ignite the imagination and are easily marketed to the public. And precisely because they are new, their flaws have never had a chance to be exposed in practice. "There has never been a steel bubble or a hamburger bubble in history," he said, "but new technologies or financial innovations cause people to buy in based merely on a promise, without understanding the downside risks." Investment allocation logic for AI: Equity over debt Regarding specific investment strategies, Marks clearly expressed a preference for equity investment. He believes that if investors are assuming the fundamental business model risk of AI companies, they should get returns as owners, not as fixed-income investors. "If you're taking basic business model risk, shouldn't you earn returns by being an owner, rather than a fixed-income investor?" he said. Risk warning and disclaimer The market involves risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the particular investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions contained herein are suitable for their specific circumstances. Investing accordingly is at your own risk.