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AI investors are treating the market like a casino, according to the CEO of semiconductor giant Broadcom.
The exec, Hock Tan, argued Monday that people investing in the tech barely understand where they are putting their money.
“A lot of investors have no clue what they are investing in,” he said at an event in Singapore, according to Bloomberg. They “set very extreme expectations only to find out that it’s almost like they are in a casino.
The remarks from the chief of Broadcom — which makes it money supplying the AI boom — may come as a surprise. The $1.7 trillion company’s stock is up nearly 10% this year.
Still, Tan went as far as to suggest some investors are being childish.
“When you are a kid, you go to a video arcade, you play. Your parents give you $10 of tokens, you finish it in 10 minutes and you haven’t learned anything,” he was quoted as saying. “That’s what happening in enterprises today.”
The comments came as Anthropic is expected to go public around Thanksgiving, with a jaw-dropping valuation in the $2 trillion range. OpenAI is expected to follow afterwards.
The companies are relying on a massive global build-out of data centers, chip production, semiconductor wafers and cloud services for their products to meet demand and become profitable.
In spite of the hype around the forthcoming mega-IPOs, Tan described AI as an uncertain investment.
“For now, it’s still losing money,” he said of AI. “So frankly, it doesn’t tell anything at this point except that there is a lot of potential revenue growth out of providing frontier generative AI models.”
Lack of capital will be the industry’s next hindrance to growth, according to him.
Intel CEO Lip-Bu Tan, who shared the stage with the Broadcom boss, echoed the skepticism — saying hardware will remain limited the next few years and memory chips could be the first part of the AI ecosystem to slow down.
Recent weeks have seen tech companies — including smart-ring maker Oura, Nvidia-backed Firmus, and SoftBank-backed data-center company SB Energy — postpone their IPOs.
High bond yields are making borrowing more expensive. On top of that, some investors are getting spooked by the industry’s reliance on future revenue streams.
Still, the biggest factor may be Anthropic’s pending IPO. Many investors are hoarding their funds for a historic mega-deal, experts recently told The Post.
Tan Su Shan, CEO of DBS Bank – the largest bank in Southeast Asia and the conference host — told Bloomberg TV on Monday the market has been repricing the risks of investing in AI, calling the pivot “healthy.”
Capital expenditures on AI are set to reach about $800 billion this year — going up to $1.1 trillion in 2027, Morgan Stanley researchers recently said.
Putting money into companies using AI to increase their profit margins — and not just the companies developing the tech — could be the next big wave of investment, they said.
Broadcom’s Tan appeared to agree.
The exec said Monday that AI companies should be finding customers who can churn a large profit thanks to their services.
Examples from Morgan Stanley include retailers that use AI to solve complex supply-chain problems, along with hospital improving documentation workflow.
It may be that the sky’s the limit when it comes to profitable use of AI. A S&P 500 study from this past summer found only 11% of companies have found ways to deeply integrate AI into their work.