One of the industry’s most closely watched investors says bubble fears swirling around the AI boom are acting as a natural pressure valve rather than a sign of market excess.
In a new CNBC interview, Brad Gerstner, founder and CEO of Altimeter Capital, says the market is still in the early stages of a historic AI expansion, even as periodic sell-offs shake investor confidence.
He says the AI boom has moved at an exponential rate since the launch of ChatGPT, with AI already making a significant contribution to the economy.
“We’re coming up on the third anniversary of ChatGPT. We’ve come a long way fast. You’ve seen Nvidia add almost $200 billion of revenue in the last three years. Truly extraordinary. Transformational phase shift, supercycle going on in our economy. It added 100 basis points to GDP this year.”
But Gerstner highlights that rapid progress has not prevented volatility, which he believes is the opposite of bubble behavior.
“Remember, this year we had two 25% drawdowns in Nvidia. It hit 90 bucks earlier in the year on the DeepSeek scare. And so there’s going to be volatility when you’re early in these phase shifts. That wall of worry prevents the bubble that everybody’s worried about.”
He points to valuations as another reason he believes the AI surge is grounded in real fundamentals rather than speculation.
“When you look at the multiples today, take Nvidia for example. I think it’s trading at 23, 24 times fully taxed earnings on next year’s numbers, 18 times on 2027 numbers. That is not the stuff that bubbles are made of. I think the rest of the Mag 7 all trades somewhere between 25 and 30 times, maybe Meta’s at 21 times earnings.
Taking a little of the gas out, having some of these conversations and debate, very healthy. And what I see out there right now is a tremendous amount of progress on the model side. But I think the diffusion, the rate at which this transforms lives, both consumer lives and enterprise, that takes time.”
Looking closer at the industry, Gerstner sees healthy competitive pressure pushing the technology forward rather than distorting it.
“I think Google’s done an incredible job. Remember a year ago, Satya [Nadella] was saying, we’re making Google dance. I think Sundar [Pichai] is making people do a little dancing today. And so that’s part of the competitive dynamic that I think is great for the country. It’s what’s going to keep us on the leading edge.”
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.