"One day we're going to have an AI reset, because waves create bubbles, because interlopers come in. However, Gurley said the sell-off will allow bargain hunters to snag a deal. He said investors should emulate Warren Buffett by determining at what price they would buy software-as-a-service (SaaS) stocks, and 'start gobbling them up' when they fall to those levels."
"He sounded the alarm on the tens of billions in funding being raised by AI startups such as OpenAI and Anthropic, and the hundreds of billions being spent on building data centers by the Magnificent Seven. 'One day, I just think we trip and run out of money on those things,' Gurley said. 'I do think that moment stands in front of us.'"
"He said private AI companies look enormously risky given how quickly they're burning through vast amounts of cash, and added that runaway expenses often mean a business isn't focused. 'I just think it's harder to land the plane,' he said, underscoring how difficult it will be for 30 or 40 AI startups that are losing billions of dollars each year to all become profitable."
Venture capitalist Bill Gurley predicts an inevitable AI market reset that will correct inflated valuations and excessive spending across the sector. He attributes this correction to the cyclical nature of investment bubbles, where rapid early success attracts new entrants and speculative capital. Gurley emphasizes that investors should prepare by identifying target prices for quality software-as-a-service stocks and aggressively accumulate them during the downturn. He expresses concern about the unsustainable cash burn rates of private AI companies like OpenAI and Anthropic, and the massive data center expenditures by major technology firms. Gurley argues that the difficulty of achieving profitability for dozens of loss-making AI startups simultaneously makes the sector particularly vulnerable to correction.
Read at Business Insider
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