{"id":80330,"date":"2025-10-17T09:23:07","date_gmt":"2025-10-17T09:23:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/80330\/"},"modified":"2025-10-17T09:23:07","modified_gmt":"2025-10-17T09:23:07","slug":"silicon-valley-takes-stock-of-the-ai-bubble","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/80330\/","title":{"rendered":"Silicon Valley takes stock of the AI bubble"},"content":{"rendered":"

One thing to start: The Trump family is building a cryptocurrency empire that\u2019s already brought in more than $1bn in pre-tax profits, an FT investigation has found. Asked whether the FT\u2019s calculations on his family\u2019s profits were broadly accurate, Eric Trump said the true figure was \u201cprobably more\u201d<\/a>.<\/p>\n

Another thing: Josh Wander, the founder of 777 Partners, the Miami-based investment and insurance group that attempted to buy Everton Football Club, has been charged with wire and securities<\/a> fraud by federal prosecutors in New York.<\/p>\n

And a big takeover bid falls flat: Spanish lender BBVA has failed<\/a> in its \u20ac17bn hostile bid to take control of Sabadell, securing only a quarter of its rival\u2019s shares in a humbling result for the larger bank\u2019s executives who staked their credibility on a deal.<\/p>\n

Welcome to Due Diligence, your briefing on dealmaking, private equity and corporate finance. This article is an on-site version of the newsletter. Premium subscribers can sign up here<\/a> to get the newsletter delivered every Tuesday to Friday. Standard subscribers can upgrade to Premium here<\/a>, or explore<\/a> all FT newsletters. Get in touch with us anytime: Due.Diligence@ft.com<\/a><\/p>\n

In today\u2019s newsletter:\u00a0<\/p>\n

Venture capital rolls the dice on AI<\/p>\n

Is there an AI bubble? Some of the tech world\u2019s top investors think so, but that\u2019s not slowing them down.<\/p>\n

VC groups have spent $161bn on AI in the year to date \u2014 equal to two-thirds of their total spending. The bulk of that has gone to just 10 groups<\/a>, whose combined valuation has risen by nearly $1tn, according to calculations by DD\u2019s George Hammond.<\/p>\n

Ask Silicon Valley\u2019s moneymen why they\u2019re splashing the cash and many will point to the dotcom era of the late 1990s: while most internet companies of that time crashed and burned, the few that survived won beyond their wildest dreams.<\/p>\n

The thing is, the scale of investment in AI is on a whole other level.<\/p>\n

VCs ploughed $10.5bn into internet companies in 2000, or about $20bn adjusted for inflation. This year, they\u2019re on course to invest well over $200bn \u2014 an order of magnitude higher \u2014 into AI companies.<\/p>\n

\u201cOf course there\u2019s a bubble,\u201d said Hemant Taneja, chief executive of VC firm General Catalyst. \u201cBubbles are good. Bubbles align capital and talent in a new trend, and that creates some carnage but it also creates enduring, new businesses that change the world.\u201d<\/p>\n

The hope is that the new technology creates its own multitrillion-dollar markets: automated software engineering and AI companionship, to name just two.<\/p>\n

But the risks of contagion if things go belly-up are greater this time.<\/p>\n

OpenAI, the world\u2019s most valuable private company, has woven itself<\/a> into the fabric of public markets through deals with AMD, Nvidia, Broadcom and Oracle.<\/p>\n

All those groups saw their share prices gain tens or hundreds of billions of dollars after striking deals to provide computing power to OpenAI.<\/p>\n

But as DD has noted before, there\u2019s no certainty that OpenAI will get the demand it anticipates, to profit from its enormous spending.<\/p>\n

The company earns about $13bn in annual recurring revenue, 70 per cent of which comes from people using ChatGPT, the FT previously reported<\/a>.<\/p>\n

Yet of its roughly 800mn regular users, only 5 per cent are paying subscribers. Its operating loss in the first half of 2025 was about $8bn.<\/p>\n

Its hopes \u2014 and possibly those of public markets \u2014 rest in significant part on the shoulders of one man, OpenAI chief executive Sam Altman.<\/p>\n

In the words of Sebastian Mallaby, author of The Power Law: \u201cIt comes down to these articles of faith about Sam\u2019s ability to work it out.\u201d<\/p>\n

Karel Kom\u00e1rek: the betting billionaire hoping to win big in the US<\/p>\n

Karel Kom\u00e1rek made a lot of his fortune running lotteries in Europe. He\u2019s now chasing what he sees as \u201cthe biggest opportunity\u201d, on the other side of the Atlantic.<\/p>\n

Kom\u00e1rek\u2019s gambling group Allwyn, which operates the UK\u2019s National Lottery, is planning a \u20ac16bn tie-up with its Greek subsidiary OPAP to create the world\u2019s second-largest listed gaming group, as DD wrote<\/a> earlier this week.<\/p>\n

The FT\u2019s Stephanie Stacey, Ashley Armstrong, Ivan Levingston and Arash Massoudi have now dug into the billionaire\u2019s past and examined his plans<\/a> to break into the US.<\/p>\n

Kom\u00e1rek, now worth $12bn, was raised in Czechoslovakia but started amassing his fortune after the 1989 Velvet Revolution ended four decades of communist rule. First he sold industrial parts, then he moved into oil and gas.<\/p>\n

His first foray into gambling came in 2011 when his investment group KKCG bought the near-bankrupt Czech lottery operator Sazka.<\/p>\n

The company rebranded to Allwyn in 2021. It now operates lotteries in seven countries, owns a stake in online sports betting company Betano, and recently acquired US fantasy sports operator PrizePicks.<\/p>\n

Kom\u00e1rek rose to prominence in Britain after Allwyn won the right to run the UK\u2019s National Lottery in 2022.<\/p>\n

But it hasn\u2019t been plain sailing: the company has been drawn into a bitter court fight<\/a> between rival National Lottery bidder Northern & Shell and the UK Gambling Commission.<\/p>\n

Kom\u00e1rek\u2019s newfound stature has also brought unwelcome attention to his earlier ties to Russian state-controlled energy group Gazprom.<\/p>\n

The billionaire\u2019s \u201cgrand vision\u201d for his business involves growing in the US \u2014 a mission that will probably include further acquisitions.<\/p>\n

The business will be going up against sports betting giants DraftKings and FanDuel-owner Flutter. Ascendant prediction markets Polymarket and Kalshi, which now threaten to upend the US gambling industry, are also among Kom\u00e1rek\u2019s competitors.<\/p>\n

No pressure.<\/p>\n

Job moves<\/p>\n

Giorgio Armani has promoted<\/a> its deputy managing director Giuseppe Marsocci to CEO after the death of its eponymous founder.<\/p>\n

Apollo Global Management has appointed Eiji Ueda as head of Asia Pacific. He succeeds Matt Michelini and was most recently chief investment officer at Japan\u2019s Government Pension Investment Fund.<\/p>\n

Retail deposit broker Raisin has named ex-NatWest CEO Dame Alison Rose to its supervisory board and as chair of its remuneration committee.<\/p>\n

White & Case has named Arun Birla and Jiten Tank as partners in London. They join from Paul Hastings.<\/p>\n

Citigroup has named Roberto Costa and Federico Monguzzi as its investment banking heads in Italy. Gregoire Haemmerle has been appointed vice-chair of UK, Europe and Middle East investment banking.<\/p>\n

Smart reads<\/p>\n

Split the risk Slicing and dicing debt could, perversely enough, make the financial system more resilient<\/a>, Lex writes. The Tricolor and First Brands failures are a case in point.<\/p>\n

Power boom Tech companies are racing beyond<\/a> America\u2019s ageing power grid system as they build power plants for their AI data centres, The Wall Street Journal writes. By 2028, they could account for as much as a tenth of US electricity use.<\/p>\n

Dizzying rise A low-profile Indian iron ore trader has taken the commodities world by storm. Its scale is proving an irritation<\/a> for Beijing, Bloomberg reports.<\/p>\n

News round-up<\/p>\n

Private equity groups Carlyle and Boyu lead bids for Starbucks China<\/a> (FT)<\/p>\n

German Chancellor Friedrich Merz calls for single European stock exchange<\/a> (FT)<\/p>\n

Harvard suffers $113mn loss after Trump\u2019s cuts to research funding<\/a> (FT)<\/p>\n

Traders at top hedge funds take home 25% of profits<\/a> (FT)<\/p>\n

US regional bank shares sink on credit worries after fraud disclosures<\/a> (FT)<\/p>\n

Johnson & Johnson sued for \u00a31bn in UK over talc cancer claims<\/a> (FT)<\/p>\n

Deel shrugs off spy scandal to boost valuation to $17bn<\/a> (FT)<\/p>\n

Italy aims to raise \u20ac11bn from banks and insurers to help fund tax cuts<\/a> (FT)<\/p>\n

Jan Marsalek\u2019s grandfather spied for the communist bloc, new evidence shows<\/a> (FT)<\/p>\n

Due Diligence is written by Arash Massoudi<\/a>, Ivan Levingston<\/a>, Ortenca Aliaj<\/a>, Alexandra Heal<\/a> and Robert Smith<\/a> in London, James Fontanella-Khan<\/a>, Sujeet Indap<\/a>, Eric Platt<\/a>, Antoine Gara<\/a>, Amelia Pollard<\/a>, Maria Heeter<\/a>, Kaye Wiggins<\/a>, Oliver Barnes<\/a> and Jamie John<\/a> in New York, George Hammond<\/a> and Tabby Kinder<\/a> in San Francisco, Arjun Neil Alim<\/a> in Hong Kong. Please send feedback to due.diligence@ft.com<\/a><\/p>\n

Recommended newsletters for you<\/p>\n

The AI Shift \u2014 John Burn-Murdoch and Sarah O\u2019Connor dive into how AI is transforming the world of work. Sign up here<\/a><\/p>\n

Unhedged \u2014 Robert Armstrong dissects the most important market trends and discusses how Wall Street\u2019s best minds respond to them. Sign up here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"One thing to start: The Trump family is building a cryptocurrency empire that\u2019s already brought in more than…\n","protected":false},"author":2,"featured_media":80331,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[345,343,344,85,46,125],"class_list":["post-80330","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-il","tag-israel","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/80330","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=80330"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/80330\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/80331"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=80330"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=80330"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=80330"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}