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Legendary fund manager has surprising take on AI

AI continues rewriting the rules, and its pace isn’t slowing down anytime soon.

So far this year, the AI trade has minted nearly $4.3 trillion in fresh market cap across a tight cluster of leaders.

The name that dominates is clearly Nvidia (NVDA) , which is hovering at nearly $4.5 trillion in value, and accounting for 7% of the entire S&P 500 by index weight.

Moreover, Wall Street’s spending math shows that the AI hype train isn’t slowing down anytime soon.

Bank of America projects AI investment to grow by over $1.2 trillion annually by 2030 as hyperscalers, enterprises, and governments build compute, power, and networks. Goldman set the early ramp near the $200 billion mark by 2025.

Hence, the setup seems straightforward, with towering winners, growing capex, and a market leaning hard into a single theme. That’s where seasoned investors look for a different lens.

Cue Peter Lynch, who is perhaps one of the most influential fund managers in the modern market. He has a fresh, unexpected take on today’s AI boom, so before chasing the next big headline, you’d want to hear how he frames the risk and the opportunity.

<strong>Peter Lynch lays down an unexpected take on the powerful AI boom</strong>Steve Liss/Getty Images

Legendary fund manager Peter Lynch has seen many ups and downs in the market over the past several years, and he’s not jumping into this one.

The former Fidelity Magellan Fund chief, who averaged almost a 30% annualized return during his 13-year run ending in 1990, said he’s staying away from the AI trade altogether.

“I have zero AI stocks,” Lynch said on The Compound and Friends podcast. “I literally couldn’t pronounce Nvidia until about eight months ago.”

Though Mr.Market continues to debate whether the AI boom is the next dot-com bubble, Lynch’s message is that discipline always beats prediction.

He took the opportunity to remind his listeners of his long-held principle in“Know what you own.”

Too many investors, he said, “put $10,000 into a stock they heard on the bus,” without understanding its business, which is guesswork best avoided.

Fund manager buys and sells

Modern investors, he feels, have “so many things that are better,” from unemployment insurance and Social Security to a Federal Reserve that acts as a stabilizer.

He isn’t dismissing the tremendous potential in AI, but it's more of an acknowledgement that he doesn’t understand it well enough to bet on it. In a market that’s fixated with the big thing in AI, the lesson from one of the giants in investing is incredibly pertinent.

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