Billionaire tech investor Orlando Bravo says 'valuations in AI are at a bubble'

Orlando Bravo, co-founder of Thoma Bravo, recently expressed concerns regarding the inflated valuations of artificial intelligence firms, likening the current situation to the dotcom bubble. However, he pointed out a significant distinction in today's market: major corporations with strong financial standings are actively investing in AI ventures. As of June, Bravo's private equity firm manages over $181 billion in assets and is primarily focused on acquiring and divesting enterprise technology companies, with a notable emphasis on cybersecurity investments. During an appearance on CNBC's "Squawk on the Street," Bravo highlighted the unrealistic expectations surrounding valuations, stating that a company generating $50 million in annual recurring revenue should not be valued at $10 billion. He stressed the necessity for such a company to generate $1 billion in free cash flow to justify that valuation, which he deemed a formidable challenge from a managerial perspective. Additionally, Bravo underscored the crucial differences between the dotcom bust and the present AI landscape. He noted, "Today, we have substantial companies with robust balance sheets funding this activity, which is a stark contrast to the circumstances of around 25 years ago." Looking ahead, Bravo's firm is on the lookout for promising opportunities within software, recognizing AI as a powerful catalyst for growth in the industry. He remarked, "AI provides a plethora of solutions, enabling easier customer engagement with products, which presents an exciting new wave of growth for the sector."