The artificial intelligence revolution is not a speculative bubble, but rather a fundamental shift akin to the advent of personal computers, according to insights shared at CNBC's Delivering Alpha conference. While the long-term opportunity is immense, the path to public markets for AI companies may require significant adjustments. Leslie Picker, Senior Banking & Finance Reporter for CNBC, joined 'Squawk Box' to discuss the key takeaways from the conference, focusing on investor sentiment regarding AI and the current state of the IPO market.
Mary Callahan Erdoes, CEO of Asset & Wealth Management at JPMorgan Chase, emphasized that AI itself is not a bubble. She articulated this by stating, "AI itself is not a bubble, that's a crazy concept. That's like saying our computers are a bubble. We are on the precipice of a major revolution in the way that companies operate, efficiencies are found, and reaching your client in a whole different paradigm." This perspective highlights the foundational nature of AI, positioning it as a transformative technology that will redefine business operations and client engagement, much like the widespread adoption of computing power did decades ago.
The discussion then shifted to the practicalities of bringing AI companies to market. Philippe Laffont, Founder and Portfolio Manager at Coatue Management, expressed a critical view of the current IPO landscape. He asserted, "The IPO market is totally broken. Like beyond repair. As measured by the fact that 20 or 30 years ago, there were so many IPOs. Today there's very few IPOs. And I think it's not a great trend because at the end of the day, it's just easier for retail investors to be involved in IPOs and then onwards." Laffont's sentiment suggests that the existing mechanisms for public offerings are not adequately serving either the companies seeking to go public or the investors looking for early access to promising ventures.
This sentiment is echoed by the observation that private companies, particularly those in the AI space, may be opting to stay private longer. Picker noted that she "asked Coatue's Philippe Laffont if the AI opportunity is in private markets or if we need to fix the IPO process or make it easier for retail investors to invest in companies." This question probes whether the current challenges are inherent to the AI sector's growth phase or if systemic issues within the IPO process are deterring public participation.
The consensus among the investors suggests that while the AI revolution is undeniably real and poised to reshape industries, the route to public markets needs to be more efficient and accessible. The current environment, characterized by a scarcity of IPOs and a perceived difficulty for retail investors to participate, may be stifling innovation and investor engagement. This presents a critical juncture for both burgeoning AI companies and the financial institutions that facilitate their growth.
