Investors are still betting on AI, but doubts are piling up
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- In today’s CEO Daily: The AI consensus is starting to crack.
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Good morning. For years, investors in both public and private markets have had one answer to almost every question: AI. About two-thirds of S&P 500 returns since 2024 have come from 42 AI stocks and almost all of the venture dollars this year are flowing into AI, with some firms nearing trillion-dollar valuations. The consensus may be starting to crack amid worries about valuations, financing, infrastructure costs, and the speed of adoption. In speaking with investors at Alpha Partners’ AlphaMarket 2026 conference yesterday, I heard themes that reinforce what business leaders are also telling me.
The short-term risks are real. Former Defense Secretary Donald Rumsfeld used to talk about the known knowns, the known unknowns and the unknown unknowns. The first category is what we know to be true: from America’s aging workforce and rising debt to the transformative potential of AI. The last includes those black-swan events that come out of left field and test a company’s resilience, from war to pandemics. But the middle category is where investors play the odds when it comes to risks. They know that the AI boom is being financed on borrowed money, with circular financing deals that only add to the fog. They know the buildout is expensive and could take decades to pay off; that wild swings in revenue estimates and reports of rogue AI are red flags. And companies like CoreWeave can’t rack up $52 billion in liabilities without a clear path to pay it back. A good long-term bet can be derailed by the reality of right now. As one fund manager put it: “The costs of AI will come down and adoption will go up. We just don’t know when.”
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Public and private markets are different. Private investors can sometimes trade their shares, but the market is less liquid, with the payoff coming when a company is sold, taken public, or raises a new round of funding. The wait times for those exits are getting longer, from the 33,575 unsold PE-backed firms that PitchBook reported as of June 30—more than double a decade earlier—to VC funding rounds that now stretch to Series G. (Bring on H, I and J!) The best deals go to a few firms, with others given a sliver at frothy valuations or locked out until an IPO. And investor panic plays out differently. As Forge Global CEO Kelly Rodrigues recently told me, the falling prices and other fears that spur public-market trading tend to slow activity in his secondary marketplace as “sellers don’t want to mark down assets and buyers wait for discounts.”
Consumer sentiment matters. The American consumer, who accounts for about 70% of GDP, continues to buy stuff, but many are stressed by energy prices, wage stagnation, rising interest rates, and an affordability crisis in everything from health care to housing. Most Americans don’t want more data centers and think AI is developing too fast. They’re worried about their jobs, don’t trust AI leaders, and think the playing field is unfair. And they’re about to vote in the midterms.
Anthropic is the test. The Anthropic IPO could be a barometer for sentiment across public and private markets. Anthropic has set up a public benefit fund for 5% of the shares and just hired a Harvard astrophysicist to the trust that controls its board. CEO Dario Amodei has to convince the public that his company is a good buy and he’s a good guy. A tepid debut wouldn’t just hurt Anthropic and its backers, it could set back other AI companies hoping to raise capital.
Contact CEO Daily via Diane Brady at [email protected]
This story was originally featured on Fortune.com