Apollo Global Management's CEO, Marc Rowan, cautioned that a significant portion of projected AI-driven wealth could vanish due to inflated valuations and unsustainable business models. The warning comes as investors reevaluate the long-term viability of AI-focused startups and tech ventures.
- Over 60% of AI startups in Series B+ stages lack positive unit economics
- Global AI venture capital funding reached $147 billion in 2024
- Apollo Global Management's AI fund has $12 billion in committed capital
- Nvidia's market cap stands at $2.5 trillion with forward P/E exceeding 70
- Marc Rowan warns a 'meaningful fraction' of AI-driven wealth could be lost
- Apollo is reevaluating portfolio companies with less than two years of revenue
Marc Rowan, CEO of private equity giant Apollo Global Management, issued a stark warning about the AI investment landscape, stating that 'a meaningful fraction of the fortunes being built on AI could be lost.' His comments, made during a recent investor forum, underscore growing concerns over speculative fervor in the sector. Rowan highlighted that while AI technology holds transformative potential, many ventures are being funded based on hype rather than sustainable revenue models or clear paths to profitability. The caution follows a surge in AI-related valuations, with some startups achieving multi-billion-dollar appraisals despite minimal revenue. According to internal Apollo analytics, over 60% of AI-focused startups in Series B and later funding rounds have yet to achieve positive unit economics. Additionally, venture capital inflows into AI startups reached $147 billion globally in 2024, up from $73 billion in 2022, signaling intense market participation. Rowan emphasized that this rapid capital deployment risks creating a bubble, citing historical parallels with the dot-com era. He warned that companies relying heavily on deep learning infrastructure costs and large-scale compute without scalable monetization strategies are vulnerable to sudden downturns. The potential for write-downs in private equity portfolios could ripple across public markets, particularly affecting high-growth tech stocks with weak fundamentals. Equities tied to AI infrastructure, including semiconductor firms and cloud service providers, have seen mixed performance. Nvidia, for example, has seen its market cap rise to $2.5 trillion but remains under scrutiny due to valuation multiples exceeding 70 times forward earnings. Apollo’s own AI investment fund, launched in 2023 with $12 billion in capital commitments, has begun reassessing portfolio companies with less than two years of consistent revenue growth.