12/11/2023 0 Comments Lightspeed broker online“It’s not always obvious who the long-term winners of innovative disruption are going to be,” Reynolds said. (CSCO) - were in the top 10 at the peak of the dot-com bubble in March 2000, according to an analysis by Glenmede. Of the 10 most valuable tech and communications stocks today, only two - Microsoft It will be “very difficult” for investors to know if they’re backing the AI equivalent of the next Amazon “We’re yet to really see translate into concrete fundamental results,” he added. Mike Reynolds, vice president of investment strategy at Glenmede, a US wealth management firm, said the current excitement is “reminiscent of the tech bubble when a lot of… companies weren’t turning earnings yet, but people were getting so upbeat on their prospects that they were willing to bid ever higher.” Stocks on the Nasdaq nosedived 81% between its peak in March 2000 and late September 2002. But, despite high hopes and huge valuations, most of the startups never generated any revenue or profit, according to Goldman Sachs. But, with every bubble, there must come a pop.Īs investors funneled money into dot-com companies from late 1998, the Nasdaq’s value more than doubled during 1999 alone. The situation is strikingly similar to the dot-com bubble, investors told CNN. While Nvidia is profitable, C3.ai, an AI software company whose stock has soared over 240% this year, is not - and is not expected to be, either this year or next. For comparison, companies on the S&P 500 have traded on an average ratio of 24 over the same period. The higher the ratio, the more likely a stock is overvalued. Its stock has soared by 207% since the start of the year.īut Nvidia’s stock has also traded on a price-to-earnings ratio - a measure of whether a share is over- or undervalued - of 237 over the past 12 months. In May, Nvidia, a US maker of the advanced microchips required to power generative AI, became the sixth company in the world to reach a market capitalization of $1 trillion. And, after a bruising 2022, stocks on the tech-heavy Nasdaq index have soared nearly 42% over that time, outpacing the broader S&P 500 index, which has risen less than 19%. It’s not just big-money private investors hoping to cash in on the AI boom: Flows into the world’s top five AI-focused exchange-traded funds have ballooned by an average of 35% since the start of the year. “There’s only a subset of maybe 80 to 100 people in the world who have had the experience training large language models… at scale,” Moyroud noted. Moyroud’s venture capital firm - which he would only say contributed a “significant portion” to the startup’s €105 million haul - was paying a premium for the three founders’ “unmatched” experience: Previously, they all worked with a type of generative AI called a “large language model ” two of them at Meta, Facebook’s parent company, and one at Google’s DeepMind. He doesn’t include Mistral AI in that group. “We’ve some people that haven’t necessarily spent a lot of time in the industry and are adding - if you could say so - a bit of generative AI sparkle” to their pitches, Moyroud said, noting that it takes time to tease out the “substance” behind some founders’ claims. He has seen an increasing number of founders mention generative AI in their pitches for funding - but he takes some of those pitches with a pinch of salt. The release of ChatGPT to the public in November was the catalyst for the current buzz, according to Moyroud at Lightspeed. (MSFT)’s $10 billion investment, announced in January, in OpenAI, the developer of popular generative AI chatbot ChatGPT.īut even excluding Microsoft’s bumper deal, the value of VC investments in generative AI was up by almost 58% compared with the same period in 2022. The bulk of this sum comes from Microsoft In the first six months of 2023, they plowed $15.2 billion into generative AI companies globally, according to Pitchbook data. The investment into Mistral AI is just one of many this year by venture capitalists jostling for a seat aboard the AI rocketship. “I call it the ‘dot-ai’ bubble, and it hasn’t even started yet,” Mostaque said recently, referring to the “dot-com” bubble of the late 1990s, when speculative bets on nascent internet companies ultimately resulted in big losses for many investors. Arthur Mensch, CEO of Mistral AI, at the Viva Tech fair in Paris on JNathan Laine/Bloomberg/Getty ImagesĮmad Mostaque, founder and chief executive of Stability AI, a generative AI firm that also counts California-based Lightspeed among its funders, expects the current wave of investment in AI companies to create “the biggest bubble of all time.”
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