Bob Michele, JPMorgan CIO, joins 'Squawk Box' to discuss Michele's thoughts on the state of markets, market valuations and much more.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Bob Michele, chief investment officer at JPMorgan Asset Management, expressed optimism about the U.S. economy and dismissed concerns that current investments in artificial intelligence represent a speculative bubble. Michele noted that companies are increasing capital expenditures, particularly in AI, and that these investments are supported by favorable macroeconomic conditions, including central bank policies and demographic trends.

He compared the current environment to the dot-com era, acknowledging that while some investments may not yield returns, continued technological investment is essential. Michele emphasized that, unlike the dot-com bubble, he does not see signs of overexuberance in AI, and believes that ongoing spending in this sector will drive future growth.

We're not in an AI bubble, says JPMorgan's Bob Michele

Bob Michael's here. You want to get in on the action of this conversation. He's like why did I even come here this. By the way Bob is the chief investment officer and head of global fixed income currency and commodities group at JPMorgan Asset Management where he oversees you ready for this. Eight hundred billion dollars folks. That's a lot of money. It is a lot of money. So. So what do you think we are in this in this side. It over a trillion. But no no we're almost a trillion. I'm going to be the professional optimist today and say we're in a pretty good place. The U.S. economy is gliding into year end in a pretty good environment right now. Corporate America seems to have absorbed the tariffs pretty well. The consumer is doing pretty well. We do expect the Fed to come in and cut rates in December. That would be a nice tailwind as we head into 2026. And the one big beautiful bill act hits. All right. OK. Here's a timing question though. And I've been talking all morning about this study that I'd looked at a chart actually came out of JP Morgan. One of your analysts put together showing that if you put money into the market at I think it was 23 or 24 times price price to earnings ratio historically 10 years later you'd look back and you'd say that you only were really benefiting in terms of it was I think was up 2 percent on an annualized basis your return or down 2 percent was somewhere in that it was it was a little scatter graph charts. You've ever seen this. So yeah. So the question is where we are right now on the cycle. If you if you were to put money in the market today or the index or something else and then you and I were to go and have breakfast together in a decade from now. I think you're going to look pretty good. I think you have to appreciate that there are some secular changes underway. Technology of course is a big one. You have to look at demographics. The 1991 births are now the largest demographic. They're 34 years old. They're dominating earning spending and saving. You've got I think a pretty stimulative macro environment on the fiscal side. Pretty much every government is borrowing and spending. And in the U.S. you've got easing central bank accommodation and probably some regulatory tailwinds as well. So we've got in video coming up this week. That seems to be like you know the thing everybody's focused on. Would you be doubling down on the mag seven or the mag 10 or whatever you want to call it. Or would you be doing something else. When. Tough question. But I think you have to look at where the money's going. And right now every company we talk to and we extend a lot of credit into the system. Everyone's gearing up for CapEx next year. They're looking to ramp up some hiring. They're looking to build out whatever they're doing in a I. They see the effectiveness of it. They want to spend in that area. And of course they're going to spend at the biggest producers in that space. Do you worry about the credit issues that we said extending credit into the market. And given the CapEx spending there is a question about CapEx spending and whether it's actually too much in this space. Given the economics of the folks who ultimately are going to have to pay for it. I think this is one instance where you can look back at the dot com era and recognize that a lot of money will be spent in areas that will be fruitless and a lot of money will be spent in areas that will bear fruit. But so what's the lesson though of the dot. If we go back to 1990 you know 7 8 9. What is the lesson of what an investor is supposed to be doing. If that if that is the corollary. The lesson of the dot com is there was a bubble. It burst. We don't think we're in one now for AI. But companies didn't stop spending on Wi-Fi the Internet and technology. Can you imagine if every company out there said I told you so. Look at stock valuations. They're down. I'm not going to invest in this. It's a hoax. Ridiculous. I want to thank you for coming in this morning. Always a pleasure. Appreciate it.

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Belém

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Los Angeles International Airport

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We're not in an AI bubble, says JPMorgan's Bob Michele

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Rise of AI