Billionaire Howard Marks’ AI Warning and 10 Non-AI Stock Picks

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Billionaire investor Howard Marks, co-founder of Oaktree Capital Management, has spent more than five decades studying financial markets, investment risk, and speculative bubbles. His firm, founded in 1995, has grown into a global investment powerhouse managing more than $200 billion in assets. Marks is particularly famous for his expertise in distressed debt, but his reputation also rests on his ability to recognize dangerous levels of optimism in financial markets.

One of his most famous warnings came in January 2000, when he published a memo titled bubble.com, questioning the extraordinary valuations of internet and technology stocks. Just months later, the dot-com bubble burst.

Howard Marks Warns AI Stocks Could Repeat the Dot-Com Bubble

Marks now sees striking similarities between the artificial intelligence investment boom and the dot-com era. In an interview with investor and author William Green earlier in October, Marks said AI could transform the world without necessarily making investors wealthy. Billionaire Ken Fisher takes the other side. Click to see his 10 best AI stocks.

Green reminded Marks of his earlier warning that most companies investors were betting on to profit from AI could eventually become worthless. Marks acknowledged the characterization and explained:

“Change the world and investors making money are not the same thing.”

Marks believes AI could dramatically improve productivity, but he questions who will ultimately capture the profits. If AI companies compete aggressively, they may be forced to cut prices, reducing their margins. Similarly, businesses using AI could pass their cost savings on to consumers through lower prices rather than generating higher profits.

Today’s AI Winners May Not Dominate Tomorrow

Marks also warned that investors should not assume today’s dominant AI companies will remain the winners of tomorrow.

“You shouldn’t make the assumption that today’s leaders are certain to be the leaders of tomorrow.”

He cautioned against chasing smaller, speculative AI companies simply because established technology leaders appear expensive. He described this approach as a lottery-ticket mentality, warning that the possibility of enormous returns does not eliminate the significant risk of failure.

Another major concern is that the long-term economics of artificial intelligence remain uncertain. Companies are spending enormous sums on computing infrastructure, yet it is unclear how much revenue and profit these investments will ultimately generate.

“Exactly how the labor-saving tool of AI is going to turn into profits, I don’t think anybody can say.”

Microsoft is one of the companies investors want to see turn that spending into profit. Check the full Microsoft bull and bear case here.

Is the AI Stock Market Already in a Bubble?

Despite his warnings, Marks has stopped short of declaring that AI stocks are already in a full-blown bubble.

In an October 18 interview with Bloomberg, he acknowledged signs of excessive enthusiasm but argued that widespread discussion of bubble risks suggests investors have not become completely oblivious to potential losses.

You can also click the image below to watch our full video on the top 10 non-AI stock picks of billionaire Howard Marks.

Methodology

We scanned Howard Marks’ Oaktree Capital Management’s second-quarter 2026 13F filing and picked his 5 biggest non-AI stocks by the dollar value of the stake. We excluded TORM, Oaktree’s largest Q2 holding, because Brookfield took control of the company holding those shares in July 2026.

#10 YPF Sociedad Anónima (NYSE:YPF)

Oaktree Stake as of Q2: $45 Million

YPF is the largest energy company in Argentina. It is the biggest shale producer in the Vaca Muerta formation and runs refineries that handle more than half of the country’s refining capacity. Oaktree raised the stake by 12% in the second quarter. Morgan Stanley sees YPF as ready for shale growth. Read our coverage of the Morgan Stanley call here.

YPF Sociedad Anónima (NYSE:YPF) is Argentina’s largest energy company. It produces about 30% of the country’s oil and gas, and the Argentine government owns 51% of its shares.

Bulls believe YPF will keep growing because it leads Vaca Muerta, the world’s fourth-largest shale oil reserve, in Argentina. Shale oil output rose 47% from a year ago in the second quarter, and management targets 250,000 barrels a day by the end of 2026. YPF plans to run 19 drilling rigs by year-end. A new oil pipeline for exports is about 80% built, and YPF keeps a 36% stake in a planned LNG export project. Net debt fell to 1.1 times EBITDA, the lowest in over a decade. The stock trades at 6.78 times forward earnings, 45.39% below the sector median of 12.41, and at 4.44 times EV/EBITDA against a sector median of 7.70. Wall Street analysts rate it a Buy.

Bears point to Argentina. The government owns 51% of YPF, so its decisions can change YPF’s prices and plans. Argentine stocks fell for two days after Lula won Brazil’s election

#9 Kilroy Realty Corporation (NYSE:KRC)

Oaktree Stake as of Q2: $69 Million

Kilroy Realty owns and develops office and life science buildings in the San Francisco Bay Area, Los Angeles, San Diego, Seattle and Austin. Oaktree held the same number of shares as in the first quarter. Leopold Aschenbrenner’s Situational Awareness LP sold its Kilroy stake, and we laid out the bear case on West Coast office. Read the bear case here.

Kilroy Realty (NYSE:KRC) owns office and life science buildings in San Francisco, Los Angeles, San Diego, Seattle, and Austin. Oaktree held a $69 million stake at the end of the second quarter, 0.96% of its portfolio.

Bulls believe demand for West Coast office space is coming back. Tech, AI, and biotech companies are leasing again. Kilroy signed 815,000 square feet of leases in the third quarter, and 83.0% of its space is now leased. Only 76.9% is occupied, so 6.1% of its space has signed tenants who have not moved in or started paying rent. That rent starts when they move in, which lifts income without any new leasing.

Bears point to falling earnings. FFO per share dropped 18.5% from a year ago because of lower occupancy and higher interest costs on refinanced debt. Revenue also fell. Nearly a quarter of Kilroy’s space is empty, and its new Oyster Point Phase 2 campus is only 7% occupied. Debt is heavy at 7.5 times EBITDA. If AI funding slows, tech tenants may stop expanding.

#8 Freeport-McMoRan Inc. (NYSE:FCX)

Oaktree Stake as of Q2: $76 Million

Freeport-McMoRan is one of the world’s largest publicly traded copper producers. It also mines gold and molybdenum. Oaktree trimmed the stake by 2% in the second quarter. Rising copper prices and higher production are running into tariff uncertainty and rising project costs. See if copper can outrun the costs here.

Freeport-McMoRan (NYSE:FCX) shares have lagged the performance of copper because the company is selling less copper than last year. Its Grasberg mine in Indonesia is still rebuilding output after an accident, so Freeport cannot fully benefit from higher copper prices. The mine ran at 67% of capacity in the third quarter. Management expects 80% by mid-2027 and near full capacity by the end of 2027, and it expects copper sales to grow more than 20% in 2027. Bulls believe the stock will catch up as that output returns. Third-quarter results beat estimates.

Bears worry the recovery keeps slipping. Management cut its 2026 copper sales forecast by about 2% and its 2027 forecast by about 2.5%, because mines in the US and Chile produced less than planned. Freeport has pushed back its Grasberg schedule before. Energy costs are rising, which raises the cost of mining copper. Freeport owns only about half of some of its biggest mines, so partners, including Indonesian state owners at Grasberg, take a share of the profit.

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