The long-awaited announcement of Apple’s (AAPL:NASDAQ) artificial intelligence (or should that be Apple Intelligence) proved something of a damp squib as far as the market was concerned.

By effectively outsourcing the job to OpenAI and ChatGPT it almost feels like the company is admitting it has been left behind in the clamour for AI. But is AI creating a bubble in financial markets?

Bank of America analysts suggest it is at least a risk. ‘The question is can we incorporate AI into the economy without an asset bubble ensuing? It may be hard to avoid given the likely significant but unclear way in which AI will impact the global economy, not dissimilar to the internet in the ‘90s or railroads in 1840s Britain. The dominance of price momentum, investors remaining believers in buying equity dips, and meme stock popularity only add to the potential for irrationality.’

However, their work implies we’re not at this point with an insufficient pick-up in the volatility which they flag as a necessary precursor before a bubble reaches full frenzy.

To get a sense of whether irrationality is taking over this author conducted his own crude exercise – looking at the performance of all the US companies with AI in their name.

Adding AI might be appropriate in some cases but there could also be an element of cynicism at play – looking to hook in investors aiming to gain exposure to the hottest new theme. Frankly on this basis it’s almost a surprise there aren’t more examples.

By our reckoning there are 12 such firms listed in the US and two in the UK. Most of these names are not profitable but, if we’re in an AI-driven bubble, investors might not be too discriminating.

Examining their performance over the last 12 months when AI has increasingly moved into the mainstream, most have stunk the place out suggesting we’re not at the Dutch tulip mania stage yet.

The Financial Conduct Authority is set to meet on 27 June to approve the final version of the new listing rules which are intended to help revive the fortunes of a struggling UK stock market.

The announcement of the new regulations is not expected until after the election on 4 July but hopefully there will be no major watering down of governance standards. As we’ve observed before this is likely to do very little for London’s reputation as a listing venue in the long term. 

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