Gene Munster, the managing partner at Deepwater Asset Management, has once again hinted that the artificial intelligence market is in the early stages of a bull run that will eventually lead to a bubble.
What Happened: On Monday, Munster took to X, formerly Twitter, and reiterated his thoughts on the current state of the AI market, citing the latest reported valuation of Cognition Labs, a Peter Thiel-backed AI startup.
“When I read headlines of the "AI Frenzy" I think the chapter of AI value creation is just starting. I believe we're in the early stages of a 3-5 year bull market that will end in a bubble,” Munster stated.
The Tesla bull also shared a Wall Street Journal report that noted Cognition Labs is in discussions with investors to raise funds at a valuation of up to $2 billion—a number that marks a significant increase from the startup’s previous valuation of $350 million earlier this year.
As per the WSJ report, Cognition is the latest young startup to see a significant increase in its value due to the surge in AI. Mistral, a French AI model developer, reached a valuation of $2 billion in December, marking a sevenfold increase from its previous funding round the summer before. Similarly, Perplexity, a two-year-old AI search startup, attained a $1 billion valuation in a recent funding round.
Why It Matters: Munster’s prediction of an impending AI bubble is not new. In February also he suggested that the AI market was at the beginning of a three to five year tech run, dismissing fears of an imminent bubble burst.
Other industry experts have also voiced concerns about the rapid growth of the AI market. In March, tech analyst Richard Windsor highlighted indicators of a potential AI bubble, including the activities of major tech players like Nvidia Corporation, Amazon.com, Inc., and Microsoft Corporation.
Despite these concerns, the AI sector continues to attract significant investor interest. Last month, Fidelity International, a financial services firm, advised investors to consider indirect plays in the AI market, stating that the sector’s growth may still present opportunities for savvy investors.
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