If you're feeling a bit of déjà vu watching the market's AI frenzy, you're not alone. Howard Marks, the legendary investor and Co-Chairman of Oaktree Capital Management, is getting those 1999 flashbacks too—and he's not thrilled about it.

From Elevated to Worrisome

In a recent conversation with 3PROTV's Global Money Talk in South Korea, Marks laid out his concerns about where the U.S. stock market currently stands. His assessment? We've shifted from "elevated to worrisome." That's not exactly the kind of progression you want to hear from one of the investment world's most respected voices.

But here's the thing: Marks isn't ready to sound the full alarm yet. He's not calling this a bubble in the classic sense. Instead, he's using phrases like "lofty but not nutty" and saying we haven't reached "mania" territory. It's a careful calibration that suggests concern without panic—classic Marks.

The Internet Changed Everything. So What?

The heart of Marks's warning is a comparison that should make any AI investor pause. Yes, artificial intelligence will almost certainly transform the world. But so did the internet, and that didn't save most investors from getting crushed.

"In 1999, we thought that the internet would change the world… and yet the vast majority of the internet companies of 1999 ended up worthless," Marks explained. The market today is "factoring in optimism" with "so much enthusiasm about AI," but enthusiasm doesn't pay dividends.

It's a distinction worth understanding: world-changing technology and profitable investments are two entirely different things. One can exist without the other, and frequently does.

Who Actually Makes the Money?

Marks gets at something fundamental here—the question of where AI profits will actually land. Will they flow to the companies creating AI? The businesses deploying it? Or will competition simply drive prices down until all those gains get passed along to customers?

"I think there's a near 100% probability AI will change the world," Marks stated, "but I think there's much less than 100% probability that investing in any given AI company or sector today will be profitable."

That uncertainty reinforces the investment philosophy Marks has championed for 35 years in his famous memos: focus relentlessly on risk control. "Our motto is if we avoid the losers, the winners take care of themselves," he explained.

Even though the S&P 500 is currently "dominated by seven tech companies," Marks argues investors need to maintain that crucial distinction between transformative technology and sound investment opportunities.

Bulls Aren't Backing Down

Not everyone shares Marks's caution. Ed Yardeni is sticking with his S&P 500 target of 7,000, anticipating a "good solid Santa Claus rally" through year-end and declaring "we're in a bull market."

Tom Lee is equally optimistic, reaffirming his own 7,000 target and adding: "I think all of this means that the S&P can close at least at 7,000. I actually think that's a low number."

The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100 respectively, closed mixed on Friday. SPY dipped 0.016% to $671.93, while QQQ advanced 0.076% to $608.86.

Futures for the S&P 500, Nasdaq 100, and Dow Jones were trading higher on Monday following that mixed Friday session.

AI-Linked ETFs Still Performing

For investors interested in AI exposure through ETFs, the options have delivered solid returns over the past year, though Marks's warnings suggest considering the risk carefully:

The performance numbers look impressive, but Marks would likely remind you that past returns during periods of "worrisome" optimism don't guarantee future success. His message isn't to avoid AI entirely—it's to approach it with clear eyes about the difference between technological revolution and investment returns.