AI Investor Rush Harks Back to ZIRP Days

It’s beginning to feel a bit like early 2021. Investor enthusiasm for AI startups has surged again, after a brief respite, as we reported today. One great example from our story: Perplexity AI has received unsolicited offers valuing the firm at more than $1 billion—just a month after its last funding round valued it at half that. Meanwhile, according to Bloomberg, SoftBank CEO Masayoshi Son is looking to raise $100 billion to fund an artificial intelligence chip venture to compete with Nvidia. That’s separate from Sam Altman’s planned AI chip and data center infrastructure venture, which he reportedly thinks may cost $7 trillion over a period of years. Yes, it’s almost as though we’re back in the zero interest rate days, when venture capitalists threw money at anything with a heartbeat—and companies responded by spending like there was no tomorrow.

But those days are gone, for most companies. Economic data out in the past few days suggests inflation hasn’t quite been vanquished, which has dashed hopes for a quick interest rate cut and has brought down the stock market a bit. (Just today the Nasdaq today fell 0.8%.) AI startups are an exception, although not all AI startups, as this story demonstrated. And in the public markets, despite skepticism among some investors, companies with a good AI story are getting a lift. Venture capitalist Tomasz Tunguz published a blog post last week making the case that enterprise software companies with AI businesses or “significant product plans” are trading at a premium to those that don’t. He estimated that the multiples of AI companies are nearly three times those of non-AI companies.