Episode summary
Howard Marks: CNBC The Exchange (2026)
The Memo by Howard Marks
· · Hosts: Kelly Evans · Guests: Howard Marks
Summary
Howard Marks argued that investors should not read too much into a day’s market sell-off because the market “exaggerates everything” and is not the right source of signals for disciplined capital allocators. His larger point was that AI is real, but it is also the least knowable and least predictable trend he has seen in his career, with huge uncertainty around who wins, what products get used, and what margins look like five years from now.
He said that view pushes Oaktree toward the safer side of AI exposure. Marks framed the firm as a credit investor that is mostly backing AI infrastructure, such as data centers and AI factories, rather than speculative software bets. In his view, lending into a highly uncertain AI buildout only makes sense when repayment is highly likely; otherwise, investors should prefer stocks, where there is at least upside if things go right.
Marks also said he does not think the Fed’s job is to prevent bubbles or protect people from mistakes. He expects rates to stay around current levels over the next few years, with inflation still a concern and the 2009-2021 era of very low rates unlikely to return. On AI’s business cycle, he thinks the industry is still near the beginning, with demand for compute still very strong and human judgment still crucial even as firms adopt tools like Claude.
Key takeaways
- Marks said AI is real but unusually hard to underwrite, making future cash flows, winners, and losers highly uncertain.
- Oaktree is focusing on safer AI credit exposure, especially long-term data center and AI infrastructure projects, rather than broad software lending.
- Marks said investors should only lend into AI if they are highly confident of repayment; otherwise, he prefers owning stocks for upside.
- He expects rates to remain roughly where they are because inflation is still a concern and the ultra-low-rate period of 2009 to 2021 was an aberration.
- Marks thinks AI is still early in its cycle, with strong demand for compute and big unanswered questions about profitability and adoption.
Notable quotes
“The market exaggerates everything”
“I find the AI daunting because it is in my opinion the least knowable, least predictable thing I've ever witnessed in my career”
“if you want to invest in AI, you should probably buy the stocks”
“I think we're pretty close to the beginning”
How the episode opens
Let's kick things off this hour with Oak Tree Capitals co-founder and co-chairman, Howard Marks. Howard, it is great to have you here, Kelly. — Thank you for making the time. — Always a pleasure. — Um, you see the big the big scary graphic. What do you make of the market sell off today?
You know, uh, one of my favorite memos of my own was written in 2015. It's called, "What does the market know?" And you know, people in my business, we're here to take advantage when we know more than the market. So we shouldn't take our signals from the market. The market exaggerates everything.
So you think that the market doesn't know anything that that smart participants don't right now. — Well, I think that's essentially true. I am I I must say I find the AI daunting because it is in my opinion the least knowable, least predictable thing I've ever witnessed in my career. Um uh I I don't think I don't know how you can figure out
Given any one company
How their product will be used five years from now. How many of it they'll sell at what price at what cost? What the profit margin will be uh which companies will win and lose you know I mean it's we have unusual uncertainty.
I've never seen anything like it. and others might say unusual potential upside. Yes.
When you hear so you guys have to commit capital every day backing companies across all parts of the economy. Where do you feel comfortable that there will be the ability to repay and where would you step back and say for instance with software? I don't know that we're not so sure.
Um there are great companies there are lesser companies.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- market volatility
- ai uncertainty
- risk-adjusted investing
- private credit
- interest rates
Companies and tickers mentioned
- Oaktree Capital Management
Watch the episode
Watch “Howard Marks: CNBC The Exchange (2026)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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