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David Booth, founder and chairman of $1.1 trillion Dimensional Fund Advisors, says investors do not need artificial intelligence to identify the next great stock because the market already processes the information for them.
“Can you beat it? Can you pick stocks? Do you need to? No,” Booth told CNBC’s Squawk Box on Tuesday. “It’s a waste of time.”
That skepticism about picking winners extends to the AI boom. Booth argues that AI can transform the economy without today’s biggest beneficiaries staying dominant. He did not name Nvidia Corp. (NASDAQ:NVDA), but the $5 trillion-plus chipmaker sits squarely at the center of that debate.
Booth Says the Market Is His AI
Booth pointed to the market’s long-term returns, saying an investor earning 9% annually would double their money roughly every eight years.
“That’s my AI,” he said.
He is not dismissing AI’s potential. In a Fortune commentary published Tuesday, Booth compared its impact to the shift from harvesting blocks of ice to modern refrigeration, saying it could reshape productivity, healthcare, transportation and work.
His point is that even a transformative technology does not make its eventual stock-market winners easy to identify.
“Trying to pick a big winner could turn you into a big loser,” Booth wrote.
The Internet Won, Its Early Leaders Didn’t
Booth pointed to the late-1990s telecom boom. The internet went on to transform the economy, but many of the companies investors expected to dominate that shift did not.
Only one of the 20 largest telecom stocks from 1999 remained in the same corporate structure 25 years later, Booth noted. Google, which became one of the internet era’s biggest winners, had not even gone public yet.
The same question hangs over the AI buildout, where infrastructure spending could approach $1.2 trillion in 2027: will today’s leaders still dominate once that spending has played out?
Nvidia Keeps Making the Counterargument
Nvidia has a stronger claim to lasting dominance than many early winners of previous technology booms.
The chipmaker recently reported $96.2 billion in quarterly revenue, up 106% year over year, while Data Center revenue jumped 117%.
Nvidia’s position also extends beyond selling chips. Jensen Huang has built an ecosystem linking Nvidia hardware and software with cloud providers, model developers and infrastructure companies.
Nvidia has also invested in customers and partners that buy its systems, relationships critics have described as circular financing. Together, those ties may make Nvidia harder to displace than the early leaders of past technology booms.