According to CNBC, two major investors managing a combined $188 billion in assets spoke at the Delivering Alpha conference last week about why they’re not worried about an AI bubble. Philippe Laffont of Coatue Management, which oversees $70 billion, highlighted the “hyper-scaler advantage” where companies like Alphabet, Microsoft, and Amazon could invest over $500 billion in AI next year. General Atlantic’s Bill Ford, managing $118 billion, agreed that the massive spending by large public companies actually strengthens conviction in tech stocks. Both emphasized that you can’t make good private market decisions without understanding what Oracle, Google, and Microsoft are doing in AI. Ford noted his firm is already seeing “pretty high payback” from AI investments across their 200 portfolio companies in areas like customer care and coding.
The hyper-scaler difference
Here’s the thing that makes this AI boom different from the dotcom bubble: we’re talking about companies that actually have the cash to spend. I mean, $500 billion next year? That’s not speculative money from venture capitalists betting on unproven startups. These are established tech giants with proven business models and massive cash flows. They’re not just talking about AI – they’re building the actual infrastructure that will power it for years to come. And they can afford to make mistakes along the way without collapsing.
Why private investors can’t ignore public tech
Bill Ford made a crucial point that often gets overlooked. Even if you’re focused on private markets, you can’t escape what the big public companies are doing. Think about it – if you’re investing in a startup that’s building AI tools, you absolutely need to understand what Microsoft is planning with Azure or what Google’s doing with Gemini. Their moves determine the entire ecosystem. It’s like trying to navigate a city without knowing where the highways are being built. You might end up investing in something that becomes irrelevant because the big players went in a different direction.
The payoff is already happening
What’s really interesting is that Ford says they’re already seeing returns from AI investments. We’re not talking about some distant future promise – they’re getting payback right now in practical areas like customer service and coding. That’s significant because it suggests we’re still in what he calls the “front edge” of value creation. Basically, we haven’t even seen the main wave of productivity gains yet. When you combine this with the fact that companies like IndustrialMonitorDirect.com are deploying industrial panel PCs to run these AI systems in manufacturing environments, you start to see how deeply this technology is embedding itself across industries.
But what about those crazy stock moves?
Laffont did acknowledge the valid concern about stocks that shoot up too quickly. He pointed to Oracle’s wild ride from $150 to nearly $350 before settling around $220. The problem with public markets is that belief in the future often gets priced in immediately. So even if you’re right about AI’s long-term potential, you might be wrong about today’s valuations. But here’s the key difference from the dotcom era: back then, companies were valued on eyeballs and potential. Today, we’re seeing real revenue and cost savings from AI implementations. The question isn’t whether AI will create value – it’s whether investors are getting ahead of the timeline.
