Howard Marks of Oaktree Capital: Investors Are Underestimating the Impact of AI
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Howard Marks of Oaktree Capital: Investors Are Underestimating the Impact of AI
Howard Marks, Co-Founder of Oaktree Capital, Warns: AI Is Making the World Unprecedentedly Unpredictable—Most Investors Have Yet to Grasp the Depth of the Impact.
Navigating Web3 tides with focused insightsBy Zhao Ying
Source: WallStreetCN
Artificial intelligence is making the world more unpredictable than ever before—and most investors have yet to grasp the depth of this disruption.
Howard Marks, co-founder of Oaktree Capital Management, said at the New York Capital Markets Industry Conference on Tuesday that AI’s impact is inseparable from its unpredictability, and that investors can no longer rely solely on forecasts about future trends to formulate strategies.
He cited Block—Jack Dorsey’s company—which announced last month it would lay off 4,000 employees, roughly half its workforce, as stark evidence of how severely markets have underestimated AI’s disruptive potential.
Marks believes that, given the fundamental business-model risks posed 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
Speaking with Bloomberg Television anchor Lisa Abramowicz, Marks said the very force that makes AI so consequential—its transformative power—also renders it profoundly uncertain: uncertain about what it will do, what it won’t do, and how extensively it will displace human labor.
Marks backed his argument with concrete data. He referenced Block’s recent announcement of approximately 4,000 layoffs—roughly half its global workforce—and asked: “How many people worldwide truly understand the significance of this?”
“Most in the investment community decide what to do based on their view of the future,” he said. “That’s not enough.”
Marks also noted that AI’s rise has intensified investor concerns over insufficient transparency in private markets.
Historical Patterns of Tech-Driven Bubbles
Having witnessed multiple boom-and-bust cycles, Marks remains wary of market euphoria triggered by new technologies. He observed that novelty always captures the imagination—and is easily marketed to the public—yet precisely because it is new, its flaws have never had a chance to surface in real-world practice.
“There’s never been a ‘steel bubble’ or a ‘hamburger bubble,’” he said. “But new technologies—or new financial innovations—can prompt people to buy in based solely on promises, without fully understanding the downside risks.”
AI Investment Allocation Logic: Equity Over Debt
On specific investment strategy, Marks clearly expressed his preference for equity investments. He argued that if investors are bearing the fundamental business-model risk of AI companies, they should be compensated as owners—not as fixed-income investors.
“If you’re bearing fundamental business-model risk, shouldn’t you be rewarded as an owner—not as a fixed-income investor?” he asked.
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