Uber Early Investor Gurley: AI Bubble Reset Looming, Undervalued SaaS Is the Investment Opportunity

Bill Gurley, general partner at Benchmark and early investor in Uber, recently stated that the AI wave is real, but the influx of people chasing quick wealth after many got rich fast is the cause of the bubble, and a reset is imminent.

He advised investors to set target prices for undervalued SaaS stocks and buy heavily when the reset comes. Hit by AI, Salesforce and ServiceNow have each fallen about 25% this year, and the software ETF (IGV) has dropped around 20%.

Talking about AI companies' burn rate, Gurley compared it to Uber's $2 billion annual burn rate back then, saying today's top model companies burn far more. He called the business model of Anthropic and OpenAI 'scary'. Amazon, Meta and other four tech giants are expected to spend a total of $700 billion on AI this year.