Investors are pulling back from artificial intelligence stocks and returning to traditional companies on the FTSE 100, according to Ruth Sunderland, a columnist at This is Money, who pointed to a string of AI mishaps and a hedge fund manager's losses as warning signs.
Sunderland wrote that she recently built an AI assistant to manage her diary and track financial news, but said the tool needs careful supervision. She said it failed to register BP's sale of its North Sea operations and sent her to a lunch with Steven Fine, chief executive of stockbroker Peel Hunt, two days early. Sunderland said the assistant also told her she was wrong to say Andy Burnham is prime minister.
Sunderland said nerves were prickling last week after 24-year-old AI figure Leopold Aschenbrenner saw his portfolio sold to hedge fund Citadel following heavy losses. She said hedge fund collapses have often preceded wider financial disasters, pointing to 2008 as an example.
FTSE 100 touches record highs
Sunderland said investors are turning instead to established sectors such as oil, banking and engineering that make up a large share of the FTSE 100, which has been touching record highs. She cited strong results from Rolls-Royce, BAE Systems, Shell, Lloyds and NatWest as evidence.
Fine told Sunderland at their lunch that the FTSE 100 has outperformed its American rivals for five years once dividends are included. According to Sunderland, the FTSE 100's total return over five years was 85 per cent, compared with 80 per cent for the S&P 500 and 75 per cent for the Nasdaq.
Segro deal and pension fund investment
Sunderland questioned why companies such as property group Segro are agreeing to takeovers by American bidders, and why UK pension funds invest only a small fraction of their money in British companies. She argued that stamp duty on share purchases should be scrapped and that pension funds should receive a dividend tax credit on UK equity holdings. She also said the Burnham government should use the National Security and Investment Act in relation to Segro, whose data centres she described as strategic assets.
Concerns over AI's approach to effort
Sunderland also criticised what she called a built-in hollowness in AI systems designed to maximise efficiency. She quoted Claude AI's description of its own approach to research as "the least effort that plausibly satisfies rather than the most thorough effort available." Sunderland said that if humans offered this level of effort it would be seen as lazy, and warned that AI's lack of morality or shame risked normalising what she called industrial-scale skiving.
Sunderland said she wants an economy built on solidity, quality and real returns rather than one she compared to candyfloss spun from plausible promises.
