Nvidia favored by Stanley Druckenmiller, who believes AI has potential for success in post-recession period

Billionaire investor Stanley Druckenmiller has stated that artificial intelligence (AI) could be a profitable opportunity for investors, particularly when the economy emerges from an imminent downturn. Speaking at the virtual Sohn Investment Conference, Druckenmiller said that the impact of AI could be as significant as the internet. After the burst of the dotcom bubble in the early 2000s, technology stocks gained dominance and led a decade-long bull market. Recently, the enthusiasm around AI has given the overall market a boost, with $700bn of the $2.5tn market cap creation for growth stocks this year resulting from bets on AI’s potential, according to Trivariate Research.

Druckenmiller said he is exposed to the AI space through two stocks so far – Nvidia and Microsoft – and that Nvidia could fare well even in a severe recession. Nvidia has experienced a large increase in its share price, with the belief that it is well-positioned to endure an economic slowdown that is already affecting personal computers and wider semiconductor sales. Druckenmiller has been calling for a recession for a while, believing that quantitative easing and zero interest rates over the past decade created an asset bubble, and we are now in the final stage of the bubble burst.

He added that “it’s hard to look at that constellation of factors and know that we’ve only had a few soft landings since 1950. All of them were preceded by what I would call proactive rather than reactive Fed Policy.” While he is not predicting a downturn worse than 2008, Druckenmiller would not be surprised if the recession has already started in the second quarter.

Druckenmiller once managed George Soros’ Quantum Fund and shot to fame after helping make a $10bn bet against the British pound in 1992. He later oversaw $12bn as president of Duquesne Capital Management before closing his firm in 2010.