Bill Gurley, a general partner at venture capital firm Benchmark, cautions that the artificial intelligence surge has formed a bubble due to rapid wealth accumulation, predicting an upcoming market correction.
Gurley's Bubble Warning
Gurley stated in an interview with CNBC's "Money Movers" that bubbles emerge when many individuals get rich quickly, drawing in more speculative investors. He emphasized that this phenomenon is tied to the genuine nature of the AI wave.
Theoretical Foundation from Carlota Perez
He referenced economist Carlota Perez's work, particularly her book "Technological Revolutions and Financial Capital," noting that bubbles only occur when the underlying technological revolution is real and impactful.
Investment Strategy for Post-Reset Opportunities
Gurley advised investors to prepare for the reset by targeting undervalued software-as-a-service (SaaS) stocks. He highlighted recent declines in key players:
- Salesforce and ServiceNow have each dropped approximately 25% in 2026.
- The iShares Expanded Tech-Software Sector ETF (IGV) is down about 20% this year.
Soaring AI Spending and Burn Rates
Major tech companies are investing heavily in AI infrastructure, with projected spending of around $700 billion this year by Amazon, Meta, Google, and Microsoft. Gurley pointed to the high cash burn rates at AI startups like Anthropic and OpenAI, describing them as "a scary way to run a company" compared to historical benchmarks.
Historical Comparison to Uber
Drawing from Benchmark's early investment in Uber, Gurley recalled the company's $2 billion annual burn rate during his involvement, which caused "high anxiety." He contrasted this with the even more aggressive spending by current AI firms, underscoring sustainability concerns.
