ANOTHER week, another record high in US equity markets. Last week’s jump was triggered by the Federal Reserve’s signal that investors can look forward to more interest rate cuts this year. But deeper market bullishness is built on two things: the cash reserves of the tech giants that now dominate the markets, and belief in their ability to monetise artificial intelligence (AI).

AI will “change the world”, we are told. It will radically increase productivity (albeit by disrupting millions of jobs). It will create a huge new wealth pie for the world to share. And, according to a breathless ARK Invest report that last week predicted a US$40 trillion boost to global gross domestic product from AI by 2030, it will “transform every sector, impact every business, and catalyse every innovation platform”.

It is the euphoria and sense of inevitability in this straightforward narrative that makes me nervous. Even if you believe AI will be today’s equivalent of electricity or the Internet, we are at the very early stages of a highly complex multi-decade transformation that is by no means a done deal. Yet valuations are pricing in the entire sea change, and then some. A February report by Currency Research Associates pointed out that it would take 4,500 years for Nvidia’s future dividends to equal its current price. Talk about a long tail.