Robinhood Markets Inc. (NASDAQ:HOOD) is set to offer retail investors a chance to invest in private artificial intelligence (AI) companies, despite concerns of a potential bubble in the sector.
AI Investment Fund To Focus On Private AI Firms
Robinhood’s CEO, Vlad Tenev, revealed that the company plans to launch a new fund managed by its subsidiary, Robinhood Ventures. This fund will allow traders to invest in a concentrated portfolio of at least five “best in class” private AI companies, said Tenev in an interview with the Financial Times on Monday.
The fund will operate as a closed-end vehicle, meaning investors won't be able to redeem their shares easily—raising the risk of their capital being locked in if many attempt to withdraw simultaneously.
Despite the high risk and the possibility of investments going to zero, Tenev noted that retail customers, known for buying stock market dips, are eager for such opportunities.
However, Robinhood is not deterred by the possibility of a bubble in the AI sector. Tenev emphasized the potential for “widescale disruption” created by AI and the importance of giving retail investors exposure to the driving forces behind this disruption.
Valuation Concerns Loom
This move by Robinhood comes on the heels of its strong Q3 performance, where it reported a double beat and record revenue.
The company is expanding beyond stocks, options, and crypto trading, with prediction markets emerging as one of its newest and rapidly growing ventures. After launching prediction markets on the 2024 presidential election and sports outcomes through a partnership with Kalshi, it is now expanding into entertainment and financial spaces with new markets.
Despite this, analysts have expressed differing opinions on its future prospects. Analyst Parkev Tatevosian, CFA, recognized the stock's strong performance in 2025 but cautioned that it is now "significantly overvalued."
On a year-to-date basis, Robinhood stock surged 230.53%.
Benzinga's Edge Rankings place Robinhood in the 99th percentile for momentum and the 93rd percentile for growth, reflecting its strong performance in both areas. However, it is in the 6th percentile for value. Check the detailed report here.
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