"Tech analyst and professor Scott Galloway has issued a stark warning regarding the highly inflated valuations of the Magnificent 10 mega-cap companies, asserting a financial collapse at generative AI leader OpenAI would trigger a systemic shock leaving "nowhere to hide" for investors across the global markets. Galloway, speaking on his Prof G Markets podcast, characterized the current market reliance on AI as precarious, noting AI has been responsible for 80% of the stock market returns since the launch of ChatGPT in late 2022."
"The immediate catalyst for Galloway's alarm is a series of "red flags" signaling a possible financial implosion at OpenAI, which Elson described as a "trainwreck from a financial management perspective." Amid some pushback from Galloway, Elson explained OpenAI is currently generating an estimated $13 billion in annual recurring revenue (ARR), yet it is spending more than double that amount. CEO Sam Altman has projected spending commitments of over $1 trillion,"
Highly inflated valuations among the Magnificent 10 mega-cap companies have concentrated market exposure in generative AI. AI reportedly drove 80% of stock market returns since ChatGPT’s late-2022 launch, making OpenAI central to market performance. OpenAI reportedly generates roughly $13 billion in annual recurring revenue while spending more than twice that amount. CEO Sam Altman has projected spending commitments exceeding $1 trillion and plans to spend $1.4–$1.5 trillion over the next several years, producing an estimated shortfall near $1.2 trillion relative to current cash reserves. A financial collapse at OpenAI would create systemic shock and leave few safe havens for investors.
Read at Fortune
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