Bill Gates Says Some Highly Valued AI Companies May Lose In the Long Run – Warns Many Firms ‘Won’t Be Worth That Much’

• Bill Gates warned that although AI is a deeply profound technology, investors need to be cautious.
• He noted that many AI-related stocks have P/E (price-to-earnings) ratios well above traditional benchmarks.
• Despite warnings about frothy valuations, Gates reiterated that AI will deliver meaningful societal benefits.

Bill Gates, cofounder of Microsoft Corp. (MSFT), has reportedly cautioned investors about high valuations in the artificial intelligence sector, saying not all companies will emerge as winners.

Speaking to CNBC at the Abu Dhabi Finance Week, Gates highlighted the intense competition shaping the AI industry.

Valuations And Market Concerns

According to the report, Gates said while AI is "a deeply profound technology that will reshape the world," investors should remain careful. He noted that many AI-related stocks have P/E (price-to-earnings) ratios well above traditional benchmarks. 

Gates warned that "a reasonable percentage of those companies won’t be worth that much," reflecting broader investor anxiety about potential overvaluation.

“AI is only a bubble in the sense that not all of these valuations will end up going up. Some of them will go down,” Gates added. 

Markets have bounced back after last month’s major downturn, which was triggered by concerns that Big Tech stocks had become too expensive. Still, talk of an “AI bubble” is growing louder.

Michael Burry, who was profiled in Michael Lewis’ book “The Big Short,” recently stated that the high valuations tied to AI could collapse within two years, a troubling prediction from the investor who foresaw the 2008 housing crisis.

AI’s Broader Impact

Despite warnings about frothy valuations, Gates reiterated that AI will deliver meaningful societal benefits, especially in health, agriculture, and education. He cited initiatives being piloted in Africa, such as AI-driven virtual doctors and farm advisors, aimed at boosting productivity for small-scale farmers, stated the report. 

“One thing that’s clear from everything that has been written so far about the risks of AI—and a lot has been written—is that no one has all the answers. Another thing that’s clear to me is that the future of AI is not as grim as some people think or as rosy as others think,” Gates had written in a 2023 blog post.

Also See: Satya Nadella Announces Microsoft’s $17.5 B Commitment To Build India’s AI Infrastructure

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