AI Hype is 'Biggest Bubble' in Private Tech, Says Jack Selby

Market Overview & Investment Climate - The AI space has seen massive investment, potentially reaching $1 trillion [1] - The AI sector, particularly around certain companies, may be experiencing a bubble, potentially the largest in private tech investing [2] - A significant shakeout is anticipated, potentially incinerating tens or hundreds of billions of dollars when the bubble bursts [4] - The current environment is beneficial for consumers due to deflationary AI products, but this is unsustainable long-term [8][9] - Early-stage investments, especially now as the cycle begins to rise, present a fantastic opportunity [42] Geopolitical Considerations - Geopolitical tensions, particularly between the US and China, significantly impact tech investments [12][18] - Tick Tock serves as a bellwether example for companies straddling the US and China, setting a precedent for future cases [18] - Investing in China is challenging for American investors due to geopolitical realities [10][11] Company Specific Analysis - OpenAI's cost estimate revisions upwards by 250% over the next four and a half years raise concerns about its valuation [2][12] - Palantir has capitalized on the AI trend, but its valuation and business model are subject to scrutiny [31][34] Regional Investment Strategies - Southeast Asia requires more liquidity events (IPOs, acquisitions) to attract greater LP capital and investor confidence [43][44] - Hong Kong remains an exciting place for young entrepreneurs, while Singapore is a better launching point for Southeast Asia-focused ventures [27][28] - Investing in companies providing "picks and shovels" (infrastructure, enabling technologies) for AI companies may be a better entry point than pure-play AI investments [22][23] Valuation & Market Cycle - Investing in AI companies at inflated valuations, such as $500 billion for OpenAI, is questionable [29] - The current market cycle, emerging from the 2019-2021 peak, presents a favorable time for early-stage tech investments [40][41] Regulatory & Reporting - Reducing the frequency of earnings reports from quarterly to semi-annually could alleviate the "hamster wheel" effect of managing to short-term expectations [48][50]