The ongoing excitement surrounding AI has prompted an analyst to highlight potential indicators of an impending market correction. Richard Windsor, a seasoned tech stock analyst and founder of Radio Free Mobile, has identified three recent occurrences that could signify an AI bubble.
What Happened: In a research note named “Magic Money Tree,” Windsor voiced concerns about the influx of money into the AI sector without adequate attention to company fundamentals, CNBC reported on Thursday. He pointed out three developments that have raised red flags for him.
The first is the reported $5 billion valuation of NVIDIA-backed (NASDAQ:NVDA) generative AI company Cohere, which almost doubled its value last June, despite a 2023 annual revenue of just $13 million. Windsor called this a “reckless abandonment.”
The second warning sign was Microsoft’s (NASDAQ:MSFT) deal with Inflection AI, indicating that things were not going well at the AI startup. The “unusual deal” allegedly involves Microsoft paying around $650 million in cash to hire Inflection AI’s staff and use its technology.
The third concern is Amazon’s (NASDAQ:AMZN) additional $2.75 billion investment in Anthropic, a generative AI ...