Jim Chanos, Bank of America, and others still aren't jumping on the AI hype train

• Artificial intelligence has sparked a major stock-market rally in 2023.
• But some big-name investors – including famed short seller Jim Chanos – aren't buying into the hype.

Artificial intelligence has emerged as one of the biggest drivers of stocks this year – with bullish investors fueling triple-digit gains for Nvidia, and other blue-chip tech companies also trading higher off the ChatGPT craze.

But some top investors aren't buying the hype.

For every Bill Ackman or Stanley Druckenmiller — who piled into AI-related stocks in the first quarter — there's a Jim Chanos, who's shrugging off the surge with casual indifference.

"Oh boy – Wall Street is quite good at creating supply to meet demand," the famed short seller said on Twitter last week, responding to a fellow investor's assertion that there isn't enough total market cap to "support the buying mania" for AI.

For Chanos and others, the craze that's currently taking Wall Street by storm has more in common with a fad like the metaverse than revolutionary technologies that genuinely disrupted the stock market.

Similarly, Bank of America strategists said last week that surging AI stocks like Nvidia could well be in a so-called "baby bubble" that'll be popped as the Federal Reserve presses ahead with further interest-rate hikes.

"Don't chase here … financial conditions are tightening again," strategists warned, pointing to previous stock-market fads that were put to an end by financial conditions tightening.

While Chanos and Bank of America aren't buying into the AI fanfare, other top investors are just worried about the potential damage the technology could cause – including Berkshire Hathaway CEO Warren Buffett and his business partner, Charlie Munger.

"It can do all kinds of things," Buffett said at Berkshire's annual shareholder meeting last month. "And when something can do all kinds of things, I get a little bit worried because I know we won't be able to un-invent it."

"I am personally skeptical of some of the hype that is going into artificial intelligence," Munger added. "I think old-fashioned intelligence works pretty well."

Read more: Billionaire investors Warren Buffett and Charlie Munger aren't sold on AI hype: 'Old-fashioned intelligence works pretty well'