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Speaking to CNBC’s Dan Murphy on the sidelines of Saudi Arabia’s Future Investment Initiative (FII) in Riyadh, Wood said that as interest rates begin to rise, “there will be a shudder” in markets.
“We are going to reach a moment in the next year where the conversation will shift from lower interest rates to rising rates,” the closely watched investor said.
“There are a lot of people out there … who think that innovation and interest rates are inversely correlated. That is not true over history,” Wood said.
“I want to disabuse people of that notion. But nonetheless, the way algorithms work these days, we think there will be a reality check, shall we say.”
Her comments come amid concerns of soaring tech valuations as both businesses and investors pour money into the sector.
Wood is one of many business leaders to have waded into the AI bubble debate, particularly as AI-driven spending has led to record deals and valuations.
Earlier in the month, the International Monetary Fund and Bank of England became the latest financial institutions to warn that global stock markets could be in trouble if investor appetite for artificial intelligence turns sour.
IMF chief Kristalina Georgieva offered some blunt advice to investors at the time: “Buckle up: uncertainty is the new normal and it is here to stay.”
She joined the likes of OpenAI’s Sam Altman, JPMorgan boss Jamie Dimon and Federal Reserve Chair Jerome Powell in warning about the risk of a stock market correction as AI spending surges.
Wood: AI is not in a bubble
Ark Invest’s Wood said Big Tech valuations will make sense in the longer term, however.
“I’m not saying there will never be any corrections. Of course there will, as many people worry: ‘OK, is this too much, too soon?’ But if our expectations for AI, especially embodied AI in the way that I just described, are correct, we are at the very beginning of a technology revolution,” Wood said.
Asked whether AI was in a bubble right now, Wood replied: “I do not believe AI is in a bubble. What I do think is, on the enterprise side, it is going to take a while for large corporations to prepare themselves to transform.”
She added: “It’s going to take a company like Palantir going into the largest enterprises and really restructuring them in order to really capitalize on the productivity gains that we think are going to be unleashed by AI.”
Global markets rallied at the start of this week, with investors buoyed by hopes that the U.S. and China could soon reach an agreement on trade. U.S. stocks jumped to fresh records on Monday with Asian markets also seeing solid gains.
Investors are closely watching a number of key market catalysts, including Big Tech earnings and a Federal Reserve interest rate decision. The U.S. central bank is widely expected to cut rates for the second time this year.
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