Ark Invest's Cathie Wood Warns of AI Stock Valuation Reality Check Amid Rising Interest Rates

Cathie Wood, CEO of Ark Invest, does not believe the current AI market is in a bubble but warns that valuations of AI-related stocks may soon face a 'reality check' as interest rates begin to rise, potentially shifting market focus from rate cuts to hikes. Wood emphasizes that innovation and interest rates are not inversely correlated as commonly assumed, but she anticipates a market correction within the next year while maintaining a long-term optimistic view on technology's future. Nvidia CEO Jensen Huang concurs that AI is not a bubble, highlighting a natural transition to accelerated computing and the increasing value of AI capabilities that justify substantial investment. Piper Sandler's Michael Kantrowitz echoes this perspective, describing the AI trade more as a boom than a bubble. However, some cautionary voices compare the current AI investment enthusiasm to the dot-com bubble, suggesting that the hype might be premature and could eventually lead to a market downturn. Overall, while optimism about AI's potential remains strong, there are growing concerns about overvaluation and the need for investors to be mindful of possible market corrections.