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It’s AI party time, and we’re just tapping the second keg.
That’s the message from Dan Ives, an analyst with Wedbush Securities whose focus is on the tech industry.
“I believe it’s 9pm in an AI party that goes to 4am,” Ives said. “Many investors have sat on the sidelines and fretted about valuation and some other doomsday scenarios and missed this historic tech run. But we don’t believe it’s over.”
Bubble boys. Ives is not alone in his optimism, but as Tech Brew reported on July 10, many investors are beginning to fear there’s an AI bubble. Concerns over the continuing utility of the technology and its profit potential are increasing as researchers and analysts question the wisdom of continued investment.
“People are jumping on the AI bandwagon thinking that money will come because they somehow have incorporated AI into their business model,” VC firm Wocstar CEO Gayle Jennings O’Bryne told Inc. “But in reality, what they may have done is just put a bit of AI functionality as a wrapper to a more traditional business model.”
The two schools of thought on the AI moment—whether it’s an opportunity or a bubble—could be summed up as what Ives referred to as a 1995 or 1999 moment—the former marking the beginning of a tech wave and the latter just before a tech bubble nearly crashed the economy. Ives sees it as 1995: “We don’t view this as a bubble.”
“The fundamentals are supported,” Ives said. “At the end of the day, that’s the key—the spending is real.”
Take your time. In a note to investors, Sequoia Capital’s David Cahn said that while the potential for AI earnings is very real, there needs to be a proportional understanding of the risks and possibilities ahead. There’s no need to buy into the “speculative frenzy” when keeping calm can pay off.
“Those who remain level-headed through this moment have the chance to build extremely important companies,” Cahn wrote. “But we need to make sure not to believe in the delusion that has now spread from Silicon Valley to the rest of the country, and indeed the world.”
Ives told IT Brew the same. It’s a long game, one that will play out over time, he said.
“I think this is multiple years,” Ives said. “Again, I’m not saying in the midst we don’t have speed bumps. But I think it’s the fourth industrial revolution playing out.”