Whether or not markets are getting ahead of themselves over artificial intelligence is a hot topic for investors right now.
Last week, billionaire investor Ray Dalio said his personal "bubble indicator" was relatively high, while Federal Reserve Chair Jerome Powell described the AI boom as "different" from the dotcom bubble.
For Magnus Grimeland, founder of Singapore-based venture capital firm Antler, it's clear the market is not overheating. "I definitely don't think we're in a bubble," he told CNBC's "Beyond the Valley" podcast, listing several reasons.
The speed at which AI is being adopted by businesses is notable compared to other tech shifts, Grimeland said, such as the move from physical servers to cloud computing, which he said took a decade. Added to this, AI is "top of the agenda" for leaders today, he said, whether they're running a healthcare provider in India or a U.S. Fortune 500 company.
"There's a willingness to invest into using that technology … and that's happened immediately," Grimeland said.
He described the rapid shift to AI as being substantially different from the dotcom bubble of the late 1990s and early 2000s, when unprofitable internet startups eventually collapsed and the tech-heavy Nasdaq lost almost 80% of its value between March 2000 and October 2002.
"What makes this a little bit different from a bubble and makes it very different from dotcom is that there's really real revenues behind a lot of this growth," Grimeland said.
OpenAI, the company behind ChatGPT, said it reached $10 billion in annual recurring revenue in June. Annual recurring revenue (ARR) is the amount of money a company expects to make from customers over 12 months.
Antler is an investor in Lovable, a company that enables people to build apps and websites using AI. In July, Lovable said it had passed $100 million ARR in eight months.
Another reason that the rapid adoption of AI is different from the dotcom boom is the speed at which consumers are taking to the technology, Grimeland said. "Think about how quickly our behavior online has changed, right? ... 100% of my searches a year ago [were on] Google. Now it's probably 20%," he said.
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