Oaktree's Howard Marks stops short of calling the AI boom a bubble
In brief
- Howard Marks hasn't joined investors calling AI trading a stock market bubble, according to Bloomberg.
- Marks' December 2025 memo flagged seed funding above $1 billion for unproven startups.
- Marks described the environment as a potential "inflection bubble" built on a genuine technological shift.
- Marks argued against going "all-in" on AI and against exiting the market entirely.
Three statements, October 2025 to February 2026
Marks first laid out his view in a CNBC interview on October 13, 2025. He said AI valuations were high but weren't yet a sign of the psychological mania that defines true bubbles.
He expanded on it in a December 2025 memo titled "Is it a bubble?" In it, Marks acknowledged exceptional exuberance across the AI sector and noted that AI stocks had accounted for a significant portion of S&P 500 gains. He also pointed to seed funding of more than $1 billion flowing to unproven startups, and he flagged heavy corporate debt levels tied to the infrastructure buildout behind AI.
He still didn't call it a bubble.
Inflection versus mean-reverting
Instead, he described the environment as a potential “inflection bubble.”
Marks drew a line between two kinds. In a mean-reverting bubble, prices rise, enthusiasm evaporates and things return to where they started with little lasting change. An inflection bubble, as he described it, forms around a genuine technological shift that can reshape the economic landscape, and it doesn't necessarily lead to immediate wealth destruction.
So the question for Marks isn't just whether prices are high. It's whether something real sits underneath them.
Underestimated, but not fairly priced
Marks came back to the subject in a February 26, 2026 memo titled "AI hurtles ahead." He described AI as underestimated in its potential and suggested it may evolve from a productivity tool into a substitute for labor.
That isn't the same as saying today's prices are right. Marks cautioned that AI investments may not be fairly priced, and he said technological progress alone doesn't justify inflated valuations (a point that cuts against the more enthusiastic readings of his memos).
His practical advice was a balanced approach. Marks argued against going "all-in" on AI, and he argued just as firmly against pulling out of the market entirely. He also warned of potential job losses and wealth destruction in the event of a market correction.
What you get is an investor who takes AI's potential seriously, sees the warning signs plainly, and won't put a single label on the trade.
Frequently asked questions
What does Howard Marks mean by an "inflection bubble"?
Marks described an inflection bubble as one that forms around a genuine technological shift that can reshape the economic landscape. He said it doesn't necessarily lead to immediate wealth destruction. He contrasted it with a mean-reverting bubble, where prices rise, enthusiasm evaporates and things return to where they started with little lasting change.
What warning signs did Marks see in the AI trade?
In his December 2025 memo "Is it a bubble?", Marks noted that AI stocks had accounted for a significant portion of S&P 500 gains. He pointed to seed funding of more than $1 billion flowing to unproven startups and flagged heavy corporate debt tied to the AI infrastructure buildout.
What investment approach did Marks recommend for AI?
Marks recommended a balanced approach. He argued against going "all-in" on AI and against pulling out of the market entirely. He also cautioned that AI investments may not be fairly priced and warned of potential job losses and wealth destruction in a market correction.
