Rich Duprey
5 min read
Quick Read
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Howard Marks warns “there is no reward in the investment business for hyperactivity,” cautioning against trading every AI earnings release or buying every dip.
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A stock down 20% can grow more expensive if earnings estimates fall 40%, lifting the forward multiple from 20x to 26.7x.
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Marks’s February memo recommended moderate, carefully selected AI exposure, separating technological promise from whether investment prices are actually attractive.
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Artificial intelligence gives investors plenty to watch and fewer reasons to feel certain. A business can expand sales, spend billions building capacity, and still leave shareholders guessing when that spending will pay off. A falling share price adds another temptation: buying before the next rebound leaves you behind.
But a cheaper stock isn’t automatically a bargain. The growing demands of the AI infrastructure spending boom make the purchase price only half the calculation. The other half is what owners eventually receive. Billionaire investor Howard Marks is urging investors to take that uncertainty seriously before making their next move.
Howard Marks’s ‘No Reward’ Warning
During Bloomberg Television’s Nov. 2 interview on The China Show, the Oaktree Capital Management co-chair offered a reminder that applies well beyond technology:
“There is no reward in the investment business for hyperactivity.”
His point concerned investment behavior broadly. Applied to AI stocks, it challenges the urge to trade every earnings release or buy every decline.
Marks also explained why AI presents a valuation problem. Value investors commonly estimate earnings five years ahead, then judge what those earnings are worth today. He questioned whether that exercise is reliable for businesses such as Anthropic, given how quickly the technology changes.
He welcomed the skepticism emerging after recent AI-market setbacks. His message wasn’t that AI lacks opportunity. It was that investors should build portfolios for lasting performance rather than chase daily price movements.
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