Selby warns AI euphoria may be the biggest tech bubble yet
AZ‑VC’s Jack Selby says private‑market AI valuations are outrunning margins as usage stays underpriced; he expects a shakeout and repricing.
Shifting from conference talk to hard numbers, venture investor Jack Selby said the current rush into artificial intelligence could be the biggest bubble in modern private‑tech investing. Speaking in Singapore, he argued that consumers enjoy AI at subsidized prices “pennies on the dollar” of actual costs and that, as pricing normalizes to reflect cost plus margin, business models built on underpriced usage will be repriced.
Selby pointed to escalating cost curves at top labs as a stress test for today’s narratives, citing multi‑year spending assumptions that were revised sharply higher (he referenced a ~250% uplift over ~4.5 years and “only $80 billion” as a telling figure). In public markets, such a revision would likely be punished, he said; in private markets it is often papered over by “breathless storytelling.”
There’s going to be tens, if not hundreds of billions of dollars that will literally be incinerated,Selby said.
He added that many AI startups will not survive once the bubble pops.
He drew a line back to the dot‑com era, noting how Yahoo’s lead gave way while AltaVista and Lycos vanished. He expects a similar split between a few durable platforms and a long tail that disappears as costs are passed through.
Selby favors a “picks and shovels” approach over pricey pure‑play AI bets and says non‑coastal U.S. deals often come at a steep discount to Silicon Valley. He also flagged U.S.–China tensions and antitrust scrutiny as cross‑winds for headline valuations, and argued that today’s deflationary pricing for end‑users won’t last once providers move to cost‑plus economics. For allocators, he said, underwriting depends on credible paths to liquidity and profitability – conditions he doesn’t yet see broadly across the newest AI cohort.
