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Over the years, investor Peter Thiel has invested in companies in the AI sector like OpenAI, SpaceX and Palantir Technologies. One of Thiel’s closest business partners believes the AI sector is in a bubble, which could weigh on those investments.
Jack Selby on AI Bubble
Thiel Capital Managing Director Jack Selby is among the latest big financial names to warn of an AI bubble.
“Anyone who doesn’t believe that there is an AI bubble is an absolute contrarian,” Selby said on the Nov. 4 episode of the “How I Invest” podcast.
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When asked why the bubble is present, Selby said factors such as valuations, multiples and circular financing point to a bubble that needs correcting.
“This will correct.”
Selby said that hundreds of billions of dollars in investment will turn to $0 when the cycle corrects. He said a correction is a “when, not if.”
Comparing the AI boom and the dot-com internet boom, Selby said the current market is capital-expenditure intensive and that companies rely on storytelling to raise money.
Selby has worked with Thiel for 27 years and was one of the first 10 employees at PayPal. Selby’s comments come when Thiel and many investment funds connected to the billionaire are investing in AI and AI-related companies.
What’s Next for AI
Selby said that AI is an amazing tool, but too much pressure is being put on building trillion-dollar AI companies.
“People need to build companies that don’t have to become trillion-dollar companies,” Selby said.
The investor said that Anthropic and SpaceX are once-in-a-generation companies that need to stop being the comparison for startups and AI-related companies.
With high valuations for companies like Anthropic, Selby said it’s a trader’s market.
“I’m an investor, not a trader.”
Selby’s comments come as the AI sector faces pressure, including concerns about circular financing and Wall Street skepticism about Anthropic’s IPO valuation.
Photo: Shutterstock
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