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Billionaire entrepreneur Mark Cuban said the current artificial intelligence boom differs from the dot-com bubble but warned that venture capital firms, private equity investors and AI infrastructure backers could face steep losses if today’s massive spending fails to deliver expected returns.
Speaking with Jason Calacanis on Monday’s episode of the All-In Podcast, Cuban said today’s AI investment cycle is being driven primarily by institutional investors rather than retail traders, making venture capital firms, private equity funds and other large investors the ones most exposed if expectations fail to materialize.
Different Bubble
“It’s not the traditional dot bubble,” Cuban said, adding that the biggest losers would likely be venture capital firms, private equity funds and institutional investors that have gone “all in” on AI.
He also said startup valuations have climbed sharply compared with a decade ago, with many companies raising capital at lofty valuations before even launching products. According to Cuban, paying too much at the start can make it difficult for investors to generate attractive returns.
Data Center Bet
Cuban questioned whether the industry’s aggressive investment in AI infrastructure will ultimately pay off.
He said technology companies are committing tens of billions of dollars to build AI data centers while also borrowing to finance expansion, calling it “planning for perfection.”
Cuban argued that improvements in AI efficiency could significantly reduce computing and power requirements over time, much like advances in fiber-optic technology eventually left excess network capacity unused after the dot-com era.
“There’s going to be a lot of data centers that are going to be turned into pickleball courts,” Cuban said.
His comments come as U.S. technology companies continue pouring money into AI infrastructure. Company filings cited by market commentator The Kobeissi Letter showed commitments for data center leases exceeded $850 billion in the first quarter as companies including Oracle Corp. , Microsoft Corp. , Meta Platforms Inc. , Amazon.com Inc. and Alphabet Inc. The infrastructure boom has also drawn increasing scrutiny from local communities. A recent Georgia Tech study found that while data centers generate measurable economic gains, most of the benefits accrue to metropolitan areas, while many rural communities that host the facilities see limited economic spillovers and higher electricity costs. Researchers said communities should closely evaluate infrastructure costs and long-term economic benefits before approving new projects.expanded their AI footprints.
Cuban’s caution also aligns with concerns raised earlier this month by Apollo Global Management Chief Economist Torsten Sløk, who warned that markets could face a “painful repricing” if returns from massive AI investments take longer than investors expect. Sløk said investors may be assuming AI spending will translate into earnings growth much faster than businesses outside the technology sector can realistically monetize the technology.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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This article Mark Cuban Says AI Data Centers Could Become Pickleball Courts— and Warns Venture Capital Is 'All In' on a Bet That May Not Pay Off originally appeared on Benzinga.com.
