Thanks for having me. Today I discuss AI's impact on the markets and the economy, including the stock concentration due to AI-related companies and potential valuation issues reminiscent of the late 1990s internet bubble.

AI-related stocks, especially the Magnificent 7, have accounted for a disproportionate share of gains since late 2022, driving record concentration in the S&P 500. This concentration is unique as it's based around one theme.

There is a valuation problem in the market, with the S&P 500 forward PE near historic highs, not only driven by AI stocks but also non-AI stocks. The market prices as if all AI companies will be winners, but history teaches not all will succeed.

This leads to a massive infrastructure buildout with overcapacity similar to the internet bubble in the early 2000s, followed by a significant correction and eventual growth led by 'content' companies leveraging that infrastructure.

Currently, AI is at an infrastructure stage, with potential for a bubble of optimism, not valuation, and unknown timing for the next leg of growth. There is risk from political and economic pushback due to energy consumption and environmental concerns of data centers.