Whether the market is ahead of the curve on artificial intelligence is a hot topic for investors right now.
Last week, billionaire investor Ray Dalio said his “bubble indicator” was relatively high, while Federal Reserve Chairman Jerome Powell said the AI boom was “different” from the dot-com bubble.
For Magnus Grimeland, founder of Singapore-based venture capital firm Antler, it’s clear the market is not overheating. “I don’t think we’re in a bubble by any means,” he said on CNBC’s “Beyond the Valley” podcast, citing several reasons.
Grimeland said the speed at which AI is being introduced into enterprises is remarkable compared to other technology changes, such as the move from physical servers to cloud computing, which took 10 years. In addition to this, he said AI is a “top priority” for today’s leaders, whether they are running a healthcare provider in India or a Fortune 500 company in the US.
“There was a willingness to invest in using that technology, and it happened quickly,” Grimeland said.
He explained that the rapid shift to AI is very different from the dot-com bubble of the late 1990s and early 2000s, when unprofitable internet startups eventually collapsed and high-tech industries abounded. Nasdaq lost almost 80% of its value between March 2000 and October 2002.
“What’s a little bit different than a bubble, and a lot different than a dot-com, is that there’s real revenue behind a lot of this growth,” Grimeland said.
OpenAI, which operates ChatGPT, announced in June that it had reached $10 billion in annual recurring revenue. Annual recurring revenue (ARR) is the amount of money a company expects to earn from customers over a 12-month period.
Antler is an investor in Lovable, a company that uses AI to help build apps and websites. In July, Loveable announced that it had surpassed $100 million in ARR in eight months.
Another reason the rapid adoption of AI is different from the dot-com boom is the speed at which consumers are adopting the technology, Grimeland said. “Think about how quickly our behavior online has changed. … A year ago 100% of my searches were on Google. Now it’s probably 20%,” he said.
Earlier this month, OpenAI acquired a stake in Google’s parent company to launch the ChatGPT Atlas browser for Mac OS alphabet It comes on the news.
small AI player
Grimeland said there was a “huge amount” of money flowing into AI companies with “wrong” valuations, but said this trend occurs early in the investment cycle. “But at the end of the day…the opportunity in this space is much greater than the investment that is being put into it,” Grimeland added.
Asked whether there are opportunities for AI startups, which are currently dominated by large companies in the United States and China, Grimeland said large companies are “being challenged in a way they haven’t seen in a long time.” He cited the example of DeepSeek, a Chinese startup that has created an AI model comparable to OpenAI’s.
”tencent We are building better AI. Baidu “Google builds great AI, but that’s not where DeepSeek was born, and the AI winners in today’s platform transitions aren’t necessarily the big incumbents,” Grimeland said.
As such, there is a huge opportunity for small AI companies to become large companies, Grimeland said, warning against companies with “positive signals” such as strong founding teams, increased customer lifetime value, and lower costs to deliver products.
-CNBC’s Dylan Butts, Ashley Capoot, Alex Harring and Jaures Yip contributed to this report.
