Gov. Ron DeSantis[1] is sounding cautious notes[2] about a stock market fueled by hype and Big Tech speculation.
“I think the market is basically just saying ‘to the moon.’ And that may be true, right? You never know. But I think that there’s definitely some cause for concern,” DeSantis opined, referencing a finance slang signaling rapid increases in value.
During a meeting of the Florida Cabinet[3] Tuesday, the second-term Republican wondered “how much a handful of companies are really driving this” current boom in the stock market as he raised questions about the state’s investment strategy to State Board of Administration[4] Executive Director Chris Spencer[5].
“It seems to be driven more on speculation about future profits rather than them making money now,” DeSantis said. “On artificial intelligence, there seems to be a view that this time’s different.”
He noted that Berkshire Hathaway is among those sitting with “huge amounts of cash” waiting for the bubble to pop.
“Obviously they must see something,” DeSantis warned. “We’ve had these equities really driven by the Magnificent Seven. And that will happen until it doesn’t.”
Spencer agreed with DeSantis’ assessment.
He said MAG 7 valuations were “extremely rich” with multiples at an “unprecedented level,” while describing an “arms race” in Capital expenditures that led to “stratospheric” price points for stocks that had unfortunate historical precedent.
“There’s a lot of similarity to both the internet bubble, but also a lesser talked about bubble when fiber was being laid across the United States, and a lot of CapEx was spent on putting fiber all over the place, and then that ended up not materializing into a very good investment for a lot of those folks,” Spencer said.
Regarding AI, the state takes a “very cautious approach,” Spencer added.
“We think that AI deployment will increase productivity in companies, but it’s too early to say whether or not the amount of money that’s being spent on AI right now is reasonable, not enough or too much. And it might be tilting to the maybe too much category.”
References
- ^ Ron DeSantis (flgov.com)
- ^ sounding cautious notes (x.com)
- ^ Florida Cabinet (www.cabinet.myflorida.com)
- ^ State Board of Administration (www.flgov.com)
- ^ Chris Spencer (www.linkedin.com)