Ark Investment Management chief executive Cathie Wood has calmed fears of a market bubble following the spectacular rise of artificial intelligence stocks, saying investors have learnt from earlier market crashes.
Caution today, however, is “useful” because it “prevents the kind of frenzy we saw during the tech and telecom bubble when investors threw money at companies attracting people online”, Ms Wood told Sky News Arabia in an interview on the sidelines of the Future Investment Initiative summit in Riyadh.
“I don’t think we are in a bubble. The reason many people fear a bubble is that seasoned investors lived through the tech and telecom bubble, and they remember the crash well, which left deep psychological scars for many,” she said.
The tech, or dot-com, bubble, burst in 2000 after a period of long speculative trends and overvaluations, causing several companies to fail and share prices to crash. The telecom bubble followed shortly after.
“I was in the market during the tech and telecom bubble, and there was no real worry, only speculation and excessive excitement. Even taxi drivers who had never invested before were putting money into a dream,” Ms Wood said.
Even US Federal Reserve Chair Jerome Powell recently said that the AI boom is unlike the dotcom bubble of the 1990s, as companies leading the AI race are contributing to economic activity.
Nvidia, the current darling of the stock market world, has been at the forefront of AI's great advance, and, as a result, its market capitalisation has zipped past the $5 trillion record mark in the past week.
Investors today are doing “serious work”, analysing the cash flows expected from what she considers the five major technology platforms evolving today – AI, robotics, energy storage, blockchain and gene sequencing.
“Technologies weren’t ready back then and costs were high. The seeds were planted at that time, grew over 25 to 30 years, and are now starting to flourish,” she said.
“Concern about a bubble is actually healthy for the market. The strongest emerging markets usually 'climb the wall of worry'.”
Middle East a key player in the AI game
Ms Wood said Saudi Arabia, the UAE and the broader Middle East are emerging as “important players” in the technology scene, noting that government regulations in the region are providing them with an advantage.
“Any country that adopts this growth and leverages these new tools will benefit greatly,” she said.
“Leaders here follow a top-down approach to establish proper regulation that reduces excessive restrictions while ensuring safety without destroying new technologies.”
The UAE, in particular, is meeting a “huge need” by investing heavily in data centres, as the Arab world's second-largest economy continues to pour in investments for technology to address user demand and support the economy and its businesses.
Abu Dhabi is hosting the 1-gigawatt Stargate data centre, being led by AI major G42 in collaboration with some of global technology's biggest names, including chipmaker Nvidia and ChatGPT maker OpenAI.
“Many people in the early days of ChatGPT expected data centre growth to accelerate, and now that we’ve seen AI’s impact and widespread productivity gains, we’re seeing productivity gains first at the individual level in company projects,” Ms Wood said.
“UAE, Saudi Arabia and all data centre expansions are an important part of this movement and will help overcome many challenges in this sector.”
Elsewhere globally, Ms Wood believes the AI battle between the US and China is driving innovation – but acknowledged the emergence and success of Chinese AI services.
“China benefited from the complexity of [US] regulations over the past 25 years and now the game has begun. We’re very impressed with what they’ve achieved in AI, especially DeepSeek,” she said, referring to the cost-friendly rival to ChatGPT.
