Another Big Tech Visionary Left to Launch an AI Startup—Is the AI Boom Really in its Earlier Innings?

• Nvidia (NVDA) draws comparisons to Cisco during the dot-com bubble when expectations proved overexaggerated.

• Jeff Bezos is founding a new company called Project Prometheus focused on AI opportunities.

• Multiple tech visionaries are leaving major companies to launch AI startups. Talent retention could prove tough.

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In many ways, it feels like the ongoing AI boom (or revolution) is mirroring the ends that unfolded prior to the big dot-com internet bubble burst of 2000-01. We’ve seen quite a bit of circular financing among the giants, and, as Dr. Michael Burry of The Big Short fame outlined in a recent note, Nvidia (NASDAQ:NVDA), which is leading the charge on the AI chip race, seems to draw similarities with Cisco (NASDAQ:CSCO) from the internet boom days. Undoubtedly, back in the days when the internet was booming, it was Cisco that was seen as the go-to pick-and-shovels play.

As it turned out, expectations were greatly overexaggerated, and shares of Cisco took a massive hit to the chin when the great bubble burst finally did happen. Indeed, Cisco seemed to be right in the blast zone when the bubble burst. Believe it or not, Cisco stock only recently recovered the ground it had lost from its 2000 peak in the past year. Undoubtedly, it took 25 years to recover, and there’s really no telling whether Cisco will stay above these levels if AI is in a bubble and it’s bound to go bust as well at some point in the next couple of years.

With many promising AI startups popping up left, right, and center, with many big-name visionaries leaving their big roles behind for a shot to lead the charge in this revolution, there’s a lot of excitement mixed in with the concern. Undoubtedly, the dot-com bubble days saw a lot of startups come from out of nowhere across the board. Many of them didn’t make it when the bubble burst and insolvency set in.

And while things may very well be different this time around since the AI revolution could lead to serious and meaningful profits in a faster timeline than expected, the growing number of startups might be ringing alarm bells in the ears of investors, especially of those who were already quite skeptical over the latest AI-led bull run.

Whether we’re talking about Jeff Bezos founding (and poised to become CEO of) a new company called Project Prometheus with another visionary, an unnamed startup headed by a former industrial designer from Apple (NASDAQ:AAPL), Yann LeCun, who’s leaving a very respectable position at Meta Platforms (NASDAQ:META) to launch of an advanced machine intelligence startup, it seems like a lot of very smart innovators in AI see ample opportunity to do their own thing.

Indeed, if there is a revolutionary technology that opens the door to new opportunities, perhaps we are still in the earlier innings of a bubble. And given many of the most enticing AI pure-plays have yet to go public, I’m not so sure there’s enough retail mania to conclude that we’re closing in on the peak of a bubble in AI. Either way, it’s going to be interesting to see how many more tech visionaries leave to start their own companies.

Of course, the startup game is tough, but with folks like Jeff Bezos ready to pour considerable sums of his own time and money on the effort, I do think there’s a real opportunity that may still be underestimated by investors. You don’t just see geniuses depart to pursue a risky venture unless there’s a golden opportunity to be had, as the technological landscape looks to shift.

As Bezos put it, perhaps there is opportunity as well as an “industrial bubble” and that it’s not necessarily a bad thing. Given he’s led a small firm through the internet bust, I’d say there is an opportunity for investors who are able to pick and choose their spots carefully. It’s tough to tell what wins and what loses at a time like this, especially if the AI boom leads to a painful correction in financial markets. In any case, it’s going to be tougher for the big tech titans to retain their top talent as more folks opt to launch startups as the AI revolution powers transformative new ideas and businesses.

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