[Me & X] AI market correction and pensions
X : Do you think there will be a correction in the AI market?
Me : Oh yes, once a significant amount of the risk has been offloaded onto pension funds through direct and indirect instruments.
X : But not in the UK? The risk is minimum.
Me : Lol. You obviously missed the Mansion House Accord. The language coming out from some pension funds is one of warning against mandates... pension funds shouldn't be railroaded into taking a haircut.
X : But AI will grow?
Me : To the Moon!!! Which is why there is growing and significant concern amongst institutional investors, including pension funds, about "AI-washing"... with 37% of pension funds, insurance asset managers, family offices, state they are "very concerned" about this.
X : Isn't this just inertia?
Me : Over risks?... i.e. it's not often you get pension funds threatening to take action against directors. On top of this, a number of VCs/Investment houses out of the kindness of their hearts are trying to help pension funds be involved in this glorious future and in no way is this profit taking.
This "interest in future opportunity" has been going on for some time. From PSP's investment in Cohere... at a measly 200x forward revenue to CoreWeave's $650 million secondary share sale... to recent high valuations and exposure to pension funds through ETFs.
There seems to be quite a few exit ramps for earlier backers. Bluntly put, pension funds and other institutional capital are being targeted as exit liquidity. Even more bluntly, read Pivot to AI... it's a bubble machine designed to soak up "trillions of dollars in family offices, pension funds, and sovereign wealth funds that are desperate to find returns".
X : You think there will be a correction soon?
Me : I think there will be more "opportunities" for pension funds and then a correction. Followed by endless articles about how no-one saw it coming, everyone is really genuinely surprised, sorry about the pension fund and "hang on, I need to answer the door as I think that my new Ferrari is being delivered".
X : But data centres are a good investment?
Me : Sure, as long as you don't listen to Alibaba's warning... nothing to see here.
Originally published on LinkedIn.