Silicon Valley billionaire warns ‘absolutely there’s a bubble’ in AI valuations: ‘Nobody would be surprised’ if OpenAI ‘disappeared next Monday’

“Everyone asks me: ‘Is there a bubble here?’ There is definitely a bubble. “It’s huge,” he says. luck In an exclusive interview at C3.ai’s New York offices at Midtown WeWork.

Over the past two years, analysts have I thought And whether AI companies, both public and private, are able to live up to their lofty valuations. To Siebel, who built his career in Silicon Valley as a sales executive at Oracle before leaving to start his own company, and eventually Sold back to previous employer For $5.8 billion, the current state of AI reminded him of the problem Dot-com bubble. Even then, the wonderful and wondrous technology – the Internet – could not save a large group of companies from collapse.

“So we have this similar thing going on with generative AI that we’ve seen with previous technologies,” Siebel said. “The market is very overvalued.”

Technology analysts that luck People who spoke generally agreed with Siebel’s view that valuations across the industry were inflated. “Right now, every prominent AI company has a fair degree of investor buzz,” said Sandeep Rao, senior research fellow at Leverage Shares, a company that offers exchange-traded products.

C3.ai specializes in enterprise AI applications that help companies with various business functions such as supply chain optimization, predictive maintenance, and tracking their sales process. It also has a string of lucrative government contracts with the likes of the US Department of Defense and the US Air Force. Its largest private clients include oil and gas giant Shell and energy company Baker Hughes (which is under contract). Up for renewal almost).

Earlier this week, C3.ai added another premium partner to its ranks when it did so Announce partnership With Microsoft. luckSiebel was interviewed before the partnership was publicly revealed. (Alan Murray, former CEO of Fortune Media, is on the board of C3.ai.)

In particular, Siebel targeted OpenAI, the startup with close ties to Microsoft and perhaps most closely associated with the AI ​​revolution. OpenAI currently has a valuation of $157 billion after an October funding round that raised $6 billion. Siebel was not impressed by this assessment.

“No one will be surprised if that company disappears next Monday,” he said.

when luck Siebel ventured that industry observers would be surprised, responding that he “disappeared” over Thanksgiving, referring to the brief summary. eviction OpenAI CEO Sam Altman in 2023.

“If it disappeared, it wouldn’t make any difference in the world,” Siebel said of OpenAI. “Nothing is going to change. I mean, no one’s life is going to change. No company is going to change. Microsoft will find something else to power Copilot. There are about 10 other products available that will do it just as well.”

Paul Marino, chief revenue officer at Themes ETF, an exchange-traded fund based in Greenwich, Connecticut, said the OpenAI brand name has a special cachet because it was first to market, but that alone cannot guarantee its market position until… Forever. “Just because you’re well known doesn’t mean you can’t be imitated, replicated or even surpassed,” Marino said.

Rao believes that there are differences between the large language models, but they are difficult to understand. “LLM degrees are very proprietary, and determining the final distinctions is not easy,” he said.

He added that their success is often due as much to their business relationships as to their underlying technology. “The advantage of LLM is not necessarily dictated by quality but could be dictated by barriers of low cost and ease of use with existing technology instead,” Rao said.

In this regard, OpenAI is certainly a good fit for this project, having built deep relationships with Microsoft.

OpenAI did not respond to a request for comment regarding Siebel’s comments.

Siebel sees value being overstated at all stages of AI startups as well.

“There is a long list of AI startups from Illinois, Wisconsin, and Stanford that are being funded today on Sand Hill Road, where there are very few ideas by very inexperienced people who are going to build generative AI applications for dentist offices.” “And vets. Or divorce lawyers and these ideas are funded with multi-billion dollar valuations,” Siebel said. “It’s just five people who don’t know anything (with) four pages of a business plan.” “This is crazy.”

Over the past few years, a wave of AI startups with very specific use cases have emerged, some of which have already sold or raised funds at significant valuations. Their records have been mixed. In August 2023, Casetext, which specializes in artificial intelligence for legal work, was sold to Thomson Reuters for 650 million dollars. JasperAI, a startup focused on AI for marketing departments, It raised $125 million At a $1.5 billion Series A valuation in June 2023 alone Reducing its internal value Three months later, he said Information.

Exempt from Sipple’s criticism, there are major tech giants that are developing their own set of AI products. He said Microsoft and Amazon are “two great companies” that are not overrated. Neither do chipmakers Nvidia and TSMC. “If TSMC goes out of business, it will be the end of the world,” he said.

When asked where C3.ai belonged, Siebel naturally had no doubt. “C3.ai is a bargain, okay? I mean it’s a friend of value stocks,” he said.

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