Artificial intelligence will drive the stock market for the next decade, former Cisco CEO John Chambers told CNBC on Wednesday. Chambers, who currently serves as the founder and CEO of JC2 Ventures, emphasized that AI will be a key determinant of success in the tech sector and that AI-related stocks will significantly outperform non-AI stocks, delivering returns potentially three times higher.

AI: The Future Driver of the Stock Market

"AI will power the stock market for the next decade," Chambers stated during an interview with CNBC’s Karen Tso at the VivaTech conference in Paris. Chambers underscored the transformative potential of AI, suggesting that investors who consistently invest in a portfolio of AI stocks over the next five to ten years are likely to achieve substantial financial gains.

Surge in AI Investments

Chambers highlighted a significant influx of venture capital into AI, noting that 38% of U.S. venture capital in the first quarter was directed towards AI stocks. He anticipates this figure will exceed 50%, illustrating the growing investor confidence in AI technologies. In comparison, Europe saw 12% of its venture capital funneled into AI during the same period.

Nvidia: The AI Market Bellwether

AI chipmaker Nvidia has become a standout performer, with its stock soaring fivefold since the end of 2022, doubling in 2023 alone. This surge is attributed to the heightened demand for AI-related products, positioning Nvidia as a pivotal player in the AI market. Chambers likened Nvidia’s current market role to Cisco’s dominance during the internet boom, asserting, "If you watch Nvidia’s sales, that’s going to be very indicative of what’s occurring overall."

AI's Transformative Impact on Employment

Maurice Lévy, chairman of Publicis, also spoke at the VivaTech conference, discussing AI’s impact on employment. He acknowledged that while AI will inevitably eliminate certain jobs, it will also create numerous value-added roles. "We don’t expect to see a net negative, we expect to see a net positive," Lévy told CNBC. He stressed that early adopters of AI will experience more significant growth and job creation.

Market Performance and Predictions

The S&P 500 and the Nasdaq Composite reached new record highs recently, driven in part by investor anticipation of Nvidia's earnings. The Nasdaq Composite has seen a 12% rise this year. Chambers credited AI for the stock market’s dramatic movement over the past 12 months, noting that European and FTSE stocks have also shown positive trends in the last six months, albeit at a slower pace.

AI’s Broader Impact

"AI is the reason the stock market has moved so dramatically in the last 12 months," Chambers said. He projected that AI would have a transformative impact akin to the internet, but three to five times more powerful. "It will change your life in every way," he concluded, highlighting the extensive influence AI is expected to have on various aspects of daily life and the economy.

Conclusion

As AI continues to evolve and integrate into various industries, its influence on the stock market and the broader economy is expected to grow substantially. Investors, businesses, and policymakers will need to adapt to this rapidly changing landscape to harness the full potential of AI technologies. The insights from industry leaders like John Chambers and Maurice Lévy underscore the importance of embracing AI to drive future growth and innovation.