Wall Street CEOs split over AI risks at Hong Kong summit

Top bankers and fund managers gave clashing views on the risks of the AI boom on Tuesday, at an investment summit in Hong Kong.

Some warned that spending and valuations are running ahead of returns. Others said demand is still strong, Bloomberg reported.

The remarks came at the Global Financial Leaders’ Investment Summit, hosted by the Hong Kong Monetary Authority, which brings together about 280 senior finance figures.

Emmanuel Roman, chief executive of bond investor Pimco, said AI financing could reach about $10tn over five years, according to Bloomberg. In time, he said, it will become too much. He said rising US interest rates, a war in the Middle East, or a crisis in the eurozone could each set off a downturn.

“At some point in time, there’s going to be a downturn, and then things are going to break,” Roman said, as reported by CNBC TV18.

Bain Capital chairman John Connaughton said some AI assets are already valued very highly, and that the key question is whether investors can earn returns to match, Bloomberg reported.

Franklin Templeton chief executive Jenny Johnson said the biggest cloud companies are turning from businesses that need little capital into ones that need a lot.

Bank chiefs, however, were more upbeat. Morgan Stanley chief executive Ted Pick said building out AI could need $10tn to $15tn over the next decade. That spending could add 0.5 to 0.7 percentage points to real GDP growth, he said, according to The Standard.

Pick also warned that some projects with weak finances will not last, but said regular market corrections are healthy.

Goldman Sachs chief executive David Solomon said demand for computing power still exceeds supply, but that long-term value will likely move to the firms building AI applications.

“Some of this scepticism today is probably healthy,” said Jon Gray, president of Blackstone.

Gray added that AI will drive more investment and more demand for capital. The summit follows a sharp fall in tech shares in October, after results such as Alphabet’s latest quarter raised fresh doubts about whether heavy AI spending will pay off.