(Bloomberg) — Maverick Capital, led by early Nvidia backer Leigh Ainslie, is launching an artificial intelligence fund to take advantage of what he sees as “insatiable demand” over the next decade.
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In a letter to investors, Ainslie said Maverick Silicon, the firm’s first sector-specific fund in its 30-year history, will invest in mid- and late-stage private companies focused on the computing infrastructure that underpins the AI ecosystem.
Maverick, which manages $7.4 billion, will put its own money into the new fund on July 1, allowing clients to invest before a second deadline scheduled for the end of the year.
A spokesman for the Dallas-based company declined to comment.
Ainslie, whose firm first invested in Nvidia two decades ago, reiterated his bullish view on AI and rejected claims that the recent sell-off in tech stocks is a repeat of the dot-com collapse of 1999. He wrote that he is increasingly being asked about similarities between that era and today’s market, and advised younger traders not to draw such comparisons.
“I understand that many investors only know about the Internet bubble from history books (sorry, podcasts) rather than first-hand experience, but I’m troubled by this question,” he wrote. “The dynamics of the two market environments are quite different.”
Ainslie, 60, said many investors are downplaying the technology’s long-term potential and concerns that the amount of money companies are pouring into AI infrastructure doesn’t justify the future benefits are misplaced.
“AI is still in its early stages,” but companies will be able to use it better over time to increase revenue and save capital, Ainslie wrote.
Companies that improve the speed and efficiency of AI computing infrastructure “will be extremely well positioned to create meaningful value as demand for computing power continues to be enormous over the next few years,” he wrote.
Still, Ainslie is less optimistic about one area of technology that is likely to be hurt by the rise of generative AI: cloud-based application software.
Companies will spend less on the technology as they prioritize investments in generative AI, a shift that will mean replacing humans with AI processors, a blow to app software vendors who base their prices on the number of employees their clients have, Ainslie wrote.
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Ainslie did not identify the companies he is betting on, but said short opportunities include “historically popular stocks with tens of billions of dollars of market capitalization at risk.”
According to the letter, Maverick’s flagship hedge fund had gained 12 percent through June this year, with the long fund gaining nearly 14 percent.
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