AI Boom and Market Volatility Insights

The founder of venture capital firm Antler, Magnus Grimeland, believes that the current AI boom is not a bubble, unlike the dotcom boom of the late 1990s and early 2000s. Grimeland cites the rapid adoption of AI by businesses and consumers, as well as the 'real revenues' generated by AI companies, as evidence that this boom is different. He points to companies like OpenAI, which has reached $10 billion in annual recurring revenue, and Lovable, which has passed $100 million ARR in eight months. Grimeland also believes that smaller AI companies can still succeed despite the dominance of large US and Chinese companies, citing examples like DeepSeek, a Chinese startup that has produced AI models comparable to those from OpenAI. Overall, Grimeland is optimistic about the opportunities in the AI space, but notes that founders need to think globally.

Goldman Sachs and Morgan Stanley CEOs warn of a potential 10-20% correction in global equity markets over the next 1-2 years, citing overvalued stocks and the likelihood of a market pullback. Despite this, they advise clients to stay invested and review their portfolio allocation rather than trying to time the market. Both banks highlight Asia as a bright spot for investment, particularly in countries like China, Japan, and India, due to their unique growth stories and recent developments such as the US-China trade pact.

HSBC CEO Georges Elhedery has warned of a mismatch between massive investments in artificial intelligence (AI) and the revenue profiles of companies making these investments. Elhedery and General Atlantic's William Ford stressed that productivity benefits and revenue gains from AI will take several years to materialize. Despite this, Big Tech firms such as Alphabet, Meta, Microsoft, and Amazon are expected to spend over $380 billion in capital expenditures this year, while OpenAI has announced $1 trillion in infrastructure deals. Ford cautioned that the initial stages of AI development may be marked by 'irrational exuberance' and misallocation of capital.