NYU Professor Warns AI Investment Tools Risk Triggering Herd Behavior Systemic Risk; DBOT Values SpaceX at $600B vs $1.2T

According to MarketWatch, New York University professor Vasant Dhar warned on Monday (July 27) that widespread reliance on the same AI models for investment decisions could trigger herd behavior and amplify financial market volatility. Dhar noted that when large investor populations follow identical AI signals, a single model error may spark coordinated buying or selling, rapidly spreading localized mistakes across the entire financial system.

Dhar presented his Damodaran Bot (DBOT) as an example, which valued SpaceX at approximately $600 billion using free cash flow methodology, compared to roughly $1.2 trillion from valuations professor Aswath Damodaran estimated and $1.77 trillion at the company's IPO. The divergence illustrates how AI models can produce significantly different conclusions than human analysts by questioning growth assumptions, particularly around SpaceX's capital-intensive AI division.