Howard Marks: A Layman Thinks About AI

Howard Marks writes that although he is not a technology expert, investors cannot abstain from thinking about AI, and he sets out nine questions he is wrestling with, from how AI actually works and what it will be able to do to who will profit, how the competitive landscape and company profitability will evolve, and the outlook for data centers. He argues that AI's predictability is unusually low, citing Claude's estimate that AI as a whole scores about a 3 on a 1-to-10 predictability scale, and warns that markets and credit are now heavily concentrated in a single AI-related factor. He also examines AI-related debt issuance, data-center financing structures and circular transactions, and the risks these pose for lenders.