‘Peak AI’ is behind us, says Aswath Damodaran; warns smaller companies could face shakeout

New York University professor Aswath Damodaran believes the next phase of the artificial intelligence trade could be difficult for smaller companies, even as technology stocks have started recovering in recent sessions.

Speaking to CNBC on Monday, Damodaran said he believes the market has already passed “peak AI,” adding that the sector is likely to witness further consolidation and correction over the coming months. According to him, the greatest pressure is unlikely to fall on the biggest technology companies but on smaller AI-focused firms that have fewer financial resources to absorb a downturn.