Billionaire venture capitalist Chamath Palihapitiya warns that a critical reckoning for markets is coming, noting that the AI boom has yet to produce a single measurable improvement in corporate profitability.
In a new episode of the All-In podcast, Palihapitiya says the companies building AI infrastructure deserve their current valuations but warns that the broader market cannot sustain the current level of AI spending without visible returns.
According to the billionaire, AI has not shown an impact on corporate America.
“The people that make the new thing needs to get valued and needs to demonstrate value. Who are the people making the new thing? It’s Nvidia, it’s the memory makers, it’s the Anthropics, it’s the SpaceXs and it’s the OpenAIs. But eventually it all comes home to roost. You can’t just make things for a market who then doesn’t have a measurable benefit themselves.
There is literally not a scintilla of evidence that AI has helped lift the operating margins of the S&P 500. There’s all kinds of bluster.”
He says the market is inching toward a fork in the road, one that will determine both how investors respond and how society processes the broader impact of AI on the workforce.
“There’s going to be an important fork in the road. One path will be OpEX shrinks, hence margins increase, and the other path is revenues grow and margins expand and OpEX stays flat, or maybe it even goes up. Those two things are very important differences because in the former you’re talking about shrinking workforce and shrinking OpEX as a percentage of operating margin and revenue. In the latter, you’re actually growing through it.”
For now, Palihapitiya says the right posture is to remain net long, but he puts a specific and finite window on how long that positioning makes sense.
“I think we have call it 500 days where you just got to be net long. But I think it’s literally in the hundreds of days from now — 500 — you’re going to have to have an important reckoning moment. The people that are paying for all these tokens need to see it in actual benefit.”
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