AI boom drives investor overconfidence despite many ‘unknowns’

Yasmine Raso

Senior Journalist

3 June 2026

Investors are leaning into a too-confident outlook on future growth driven by the expected gains from the artificial intelligence (AI) thematic, at a time when it is still too early to tell who will emerge as the ‘winners and losers’.

That is the assessment of Talaria Capital co-CIO, Chad Padowitz, who also said that the current level of confidence at which the market has priced in these AI winners and losers is not a reflection of the reality of a long-term outlook amid such challenging conditions.

“We see so many portfolios positioned as though the next decade can be forecast with pinpoint precision. Investors are willingly paying for companies whose valuations are reliant on earnings years and even decades into the future,” he said.

“Most people would agree that the future is unknown. But investors are not acting like it.

“When you pay 20, 25, 30 times earnings for anything you are taking a confident view of a 15-to-30-year time horizon. But the future is unknowable and there are going to be substantial winners and losers from AI.

“Given the level of uncertainty, investors need to bring more humility to how they value future cash flows. It is far easier to have confidence in what a business can generate over the next three to seven years than it is to forecast 15 to 30 years out, yet valuations seem to rely on that level of long-term confidence.”

Padowitz noted that while an AI or robotics-driven productivity boom would be an ideal scenario to emerge from this ‘winners and losers’ narrative, it seems unlikely given global demographics and ageing populations and makes it even more difficult for investors to predict.

“Inflation is likely to remain structurally higher. The question is whether investors should focus on the inflation they are told, or the inflation they actually experience,” he said.

“Official inflation may be one number, but people’s lived experience is likely to be higher.”

Padowitz suggested investors should lean into companies and assets that can weather ongoing inflation, higher funding costs and shorter investment horizons, with opportunities also in low-duration equities and value stocks.

“These are companies that don’t have a lot of debt, and therefore good balance sheets,” he said.

“With a world that’s changing with AI, a good balance sheet essentially allows a company to be more nimble – whether that’s making an acquisition or investing in a slightly different business type.

“Real assets are important in an environment of inflation and financial repression. They keep their value because they’re productive assets. This could be anything from property, infrastructure, and precious metals, as well as plant and equipment.”