Dan Loeb: The AI investment boom is far from peaking; the current market is fundamentally different from the internet bubble era

Deep Tide TechFlow News — On May 30, Dan Loeb, founder of the hedge fund Third Point, with assets under management of approximately $24 billion, recently again expressed an optimistic view of the artificial intelligence industry, saying that the current AI investment cycle is significantly different from the internet bubble period of 2000.

Loeb noted that major technology companies this year have already announced AI infrastructure investment plans totaling more than $700 billion, and that spending next year is expected to exceed $1 trillion. Unlike during the internet bubble, these companies generally have solid profitability and ample cash flow, and most capital expenditures can be covered by their own operating cash flows.

Loeb said that believing these investments will ultimately fail to deliver returns means assuming that tech giants are wasting money in a meaningless way, which is not the same as the situation during the internet bubble era, when many companies lacked profitability support. He also emphasized that there are currently no clear signs of a valuation bubble in the market.

To support his view, Loeb cited AI company Anthropic, pointing out that its latest funding valuation has risen to about $96.5 billion, up sharply from the valuation of about $38 billion in February this year. Meanwhile, its annualized revenue over the same period increased from about $1.4 billion to about $4.7 billion, indicating that demand for AI products and the pace of commercialization are advancing rapidly.

Loeb believes the current AI wave is still in its early stages, especially in enterprise applications, where there remains significant room to improve market penetration and depth of application. “The AI boom may just be starting,” he said, adding that he still firmly stands in the bullish camp.

As of the end of March this year, Third Point’s disclosed major holdings include leading technology and AI companies such as Amazon, Alphabet, Meta Platforms, and NVIDIA.