British tech investor James Anderson has expressed concerns about an AI stock market bubble as valuations of AI companies have soared — a move he characterized as “disconcerting.”
Anderson said it’s only been in the last couple of months that he has seen the signs of an investment bubble after OpenAI and rival Anthropic announced massive valuation increases.
AI activity moving at a rapid scale and pace
OpenAI is reportedly discussing a share sale that would increase the startup’s valuation to $500 billion. As recently as March, OpenAI was valued at $60 billion.
Referring to both OpenAI and Anthropic, Anderson said, “That scale of jump and the pace with which it happened did bother me.”
Nvidia’s $100 billion investment in OpenAI is another concern, Anderson said. As a major chip maker, Nvidia is also a key player in AI infrastructure since its chips are used to train and operate AI models. This has driven Nvidia’s stock market valuation up to $4.5 trillion. Under the terms of the deal, Nvidia will receive cash from OpenAI for chips, and Nvidia will invest in OpenAI for non-controlling shares.
AI bubble warnings issued by others
Anderson isn’t the only one eyeing the status of the AI industry. While characterizing AI as being in an “industrial bubble,” Amazon founder Jeff Bezos also said the technology is “real” and that it will be advantageous to society.
Speaking at Italian Tech Week in Turin last Friday, Bezos said that when an industrial bubble occurs, stock prices are “disconnected from the fundamentals” of a business. Every experiment or idea gets funded during bubbles, which Bezos said he believes is happening right now.
He gave an example of a six-person company getting billions of dollars in funding and called that “very unusual behavior.” However, industrial bubbles are not necessarily bad, Bezos added, saying that society benefits from inventions.
Concerns about stock market levels amid the AI hype have also been expressed by Goldman Sachs CEO David Solomon. “Markets run in cycles, and whenever we’ve historically had a significant acceleration in a new technology that creates a lot of capital formation, and therefore lots of interesting new companies around it, you generally see the market run ahead of the potential … there are going to be winners and losers,” said Solomon, who also spoke at Italian Tech Week.
OpenAI is making a billion-dollar bet on power. The company is shifting from renting cloud space to owning industrial-scale sites.
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