AI has propelled the market well lately. Will that last?
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What could slow the pell-mell stock market advance of artificial intelligence? If there is any pothole ahead, it’s the glitch factor. A host of AI-related screwups is circulating in public and social media.
So far, stories about missteps haven’t derailed the AI stock market express, but there is a chance that enough of them could introduce a wariness about this new capability and impede the sector’s stock performance.
AI harnesses high-end computer power to reason, learn, solve problems and make decisions, which previously have been humans’ exclusive purview. The momentum is potent. Big tech firms like Nvidia, Meta Platforms and Microsoft are pouring billions into AI.
Nvidia, which boasts the world’s largest market cap, has seen its stock leap 15-fold over the past five years. Small wonder: AI’s earnings and revenue growth are often spectacular. AI-centric Nvidia’s just-announced second quarter showed a 56% profit boost over the year-prior period. It’s significant that, when the chip designer predicted Wednesday that Nvidia’s enviable revenue expansion might not maintain such a torrid pace up ahead, the stock flagged 2%.
Up to now, worries over AI have centered on its strengths, rather than its weaknesses. The AI mania has had many folks worried that AI might someday supplant humanity, a scenario envisioned with HAL, the homicidal spaceship-running computer in the sci-fi classic 2001: A Space Odyssey. Thus, it is natural that some people might increasingly seize on AI pratfalls as a reassuring counter-narrative, and weaken AI equity prices.
Already, doubts centered on AI fallibility have causes ripples of anxiety among tech investors. A recent MIT survey found that most of the $40 billion that companies have sunk into the technology have reaped zero returns and warned that many may never see any upside. And tellingly, OpenAI CEO Sam Altman, the godfather of artificial intelligence, has warned that AI investors may be in a stock bubble resembling the late 1990s dotcom disaster.
Poor data, cybersecurity concerns, resistance to change, regulatory obstacles and insufficient AI talent were the biggest challenges AI faces to achieving full returns on investment, the MIT poll found.
According to the tech mavens at Tech.co, glitches are sufficiently plentiful to raise questions about AI’s prospects. As Aaron Drapkin, the firm’s content manager, wrote, “AI errors have become as much a part of the technology as its accomplishments in 2025, with popular platforms experiencing enough hallucinations to make users concerned about the future of the tech.”
Among the recent problems Tech.co found: an AI-run hiring system for McDonald’s led to the exposure of millions of applicants’ personal information. Plus, an AI-generated summer reading list recommended a batch of fictitious titles, and the list appeared in several big newspapers. And AI-produced imagery last year suggested that singer Taylor Swift had endorsed Donald Trump for president; she hadn’t.
The good news is that “AI will get better,” said Jackson Garton, chief investment officer at Makena Capital Management, in an interview. Indeed, he observed, people tend to be more critical of machines’ mistakes: “The tolerance for human error is greater than for machine error.” Garton advises that people use AI to appreciate its usefulness. “If you use it yourself, you will see how it will help you.” Companies that employ it well will benefit, as will their stocks, he said.
An old satirical illustration from the early 1900s, when automotive technology was poor, featured a frazzled motorist and his broken-down jalopy, as a grinning farmer on horseback passed by. The farmer yelled: “Get a horse.” We all know how the world of travel has changed since then. So will the tech world, driven by artificial intelligence, with a large potential for share appreciation among AI companies, tech in general and equities overall.
