Artificial intelligence is making the world more unpredictable than ever before, and most investors have yet to grasp the full depth of its impact. Howard Marks, co-founder of Oaktree Capital Management, stated at a capital markets industry conference in New York on Tuesday that the power of AI is matched by its unpredictability, making investment strategies based solely on forecasts of future trends insufficient. He cited the example of Block, led by Jack Dorsey, which announced 4,000 job cuts last month—approximately half of its workforce—as direct evidence that the market is severely underestimating AI's disruptive force. Marks argued that, given the fundamental business model risks posed by AI, holding equity in AI-related companies is preferable to providing them with debt financing, and investors should participate as owners rather than fixed-income investors.

The unpredictability of AI is both its strength and its risk. In an interview with Bloomberg Television host Lisa Abramowicz, Marks noted that the very forces that give AI its significance also endow it with an elusive uncertainty—whether in terms of what it will do, what it will not do, or the extent to which it will replace human jobs. Marks supported his view with specific data, referencing Block's recent announcement of cutting around 4,000 jobs, which represents nearly half of its total workforce, and questioning, "How many people globally truly understand the implications of this?" He added, "Most people in the investment world base their actions on their judgments about the future. That is no longer enough."

Marks also pointed out that the rise of AI has heightened investor concerns over insufficient transparency in private markets. Having witnessed multiple boom-and-bust cycles, Marks remains cautious about market euphoria driven by new technologies. He observed that new innovations always capture the imagination and are easily marketed to the public, but precisely because they are novel, their flaws have not yet been exposed in practice. "There has never been a steel bubble or a hamburger bubble," he said, "but new technologies or financial innovations lead people to buy into promises without understanding the downside risks."

In terms of investment strategy, Marks clearly expressed a preference for equity over debt. He believes that if investors are taking on the fundamental business model risks associated with AI companies, they should seek returns as owners rather than as fixed-income investors. "If you're taking basic business model risk, shouldn't you get paid for it by being an owner rather than a fixed-income investor?" he remarked.