Nassim Taleb has alerted investors that volatility in the software industry is set to intensify as the AI-driven rally enters a more fragile phase, potentially leading to bankruptcies, and that investors should prepare accordingly. The author of "The Black Swan" contends that markets are underestimating structural risks while overestimating the staying power of today's AI frontrunners. He cautioned that although AI will generate enormous profits, history suggests that early pioneers are often displaced. “There will certainly be people making huge amounts of money in AI,” Taleb remarked during an interview on the sidelines of the SeaFair event in Miami, hosted by Universa Investments. However, he indicated that the beneficiaries may not be the companies currently dominating AI-related trading. He stated that as technological instability, heightened competition, and shifts in the geopolitical landscape reshape the industry, the probability of some software firms going bankrupt is significant. The S&P 500 fell about 1% on Monday as investors grappled with tariff uncertainties and two conflicting views fueling AI-related anxiety: on one hand, concerns that rapidly advancing AI tools could disrupt subscription-based software companies as coding becomes less difficult; on the other, fears that tech giants racing to develop and build AI infrastructure are engaging in a risky borrowing spree that may take years to yield returns.
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