Markets have turned volatile amid rising AI bubble fears, even as major investors argue the technology’s buildout is still in its early stages.<\/p>\n
Markets have turned volatile amid rising AI bubble fears, even as major investors argue the technology’s buildout is still in its early stages. Andrew Caballero-Reynolds\/AFP\/Getty Images<\/p>\n
Markets have turned volatile amid rising AI bubble fears, even as major investors argue the technology’s buildout is still in its early stages. Andrew Caballero-Reynolds\/AFP\/Getty Images<\/p>\n
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Investors are growing jittery about a potential bubble in artificial intelligence stocks, but the real payoff may be just beginning \u2014 and it could extend well beyond Silicon Valley’s usual winners, a $19 billion hedge fund investor said.<\/p>\n
“This is a generational platform shift. We are in probably the third or fourth inning of the actual build out,” David Craver, the co-chief investment officer of Lone Pine Capital, said on Goldman Sachs’ “Exchanges” podcast published Thursday.<\/p>\n
Craver added that while he understands concerns surrounding the vast sums of money being spent on AI, the underlying signals \u2014 improving models, tight capacity, and real-world business impact \u2014 suggest the cycle still has room to run.<\/p>\n
He points to three signals that keep him bullish on AI infrastructure.<\/p>\n
First, the models are still improving as more computing power is thrown at them. “They are absolutely getting better,” and have more uses, he said.<\/p>\n
Second, demand continues to outstrip supply as hyperscalers and inference providers still lack sufficient capacity, he said.<\/p>\n
Third \u2014 and most important \u2014 companies are already seeing dramatic returns from deploying AI internally.<\/p>\n
He said founders and digital-first CEOs are describing “mind-blowing” productivity gains, from automated coding to replacing manual workflows with AI agents.<\/p>\n
“We have had numerous CEOs say to us, ‘I think I can triple or more the revenues in my business. And I’m never going to have to hire another human being,'” Craver said.<\/p>\n
Still, not every company is seeing those kinds of returns on investment. According to PwC’s latest Global CEO Survey, released last month, 56% of the 4,454 chief executives surveyed said AI has yet to deliver revenue or cost benefits for their businesses.<\/p>\n
When legacy companies fight back<\/p>\n
Early AI gains have gone primarily to infrastructure leaders like Nvidia and cloud providers. Craver thinks the next phase will be defined by adoption across large, incumbent companies.<\/p>\n
“I have a theme that I call ‘revenge of the dinosaurs,’ which is, larger companies are going to adopt this technology and take cost out of their business in a huge way over the next two and three and four years,” he said.<\/p>\n
He said the impact would show up clearly in corporate earnings.<\/p>\n
“I think we’re going to get on conference calls in 2027, and CFOs are going to say, ‘I just took half a billion dollars out of my spending on an annual basis because we’re implementing this new technology,'” he said.<\/p>\n
That dynamic, in his view, is “super bullish for the market.”<\/p>\n
Craver’s comments come at a fragile moment for AI-linked stocks, as investors grow more nervous after a blistering multi-year run.<\/p>\n
This week, software stocks sold off as investors weighed the disruptive impact of AI against concerns about elevated valuations, aggressive capital spending, and whether the buildout has outpaced fundamentals.<\/p>\n
Meanwhile, shares of insurance brokerages, wealth managers, and real estate services firms \u2014 sectors seen as exposed to AI disruption \u2014 have fallen sharply.<\/p>\n
Despite the volatility, Craver said Lone Pine remains “quite bullish on that overall bet” on AI.<\/p>\n
“It’s not a bubble when everybody thinks it’s a bubble,” he said. “It’s going to be a bubble when we get to the other side of this.”<\/p>\n
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