In an exclusive interview with ET, he stressed that avoiding a potential bubble requires disciplined investing and maintaining diversified portfolios.
Morgan explained that venture investing typically follows two paths: buying low and selling high, or buying high and selling higher. However, he cautioned that the latter strategy only works during a market bubble. “In a bubble, everybody thinks buy high, sell higher works forever, but that only works inside the bubble,” said the 80-year-old investor.
Drawing parallels with past technology booms, Morgan noted that the massive influx of capital into AI startups resembles earlier hype cycles. While many companies may struggle if the bubble bursts, a handful are likely to emerge significantly stronger.
In his view, OpenAI is “overvalued.”
“OpenAI is overvalued, more overvalued than some others. Anthropic, for example, is somewhat better in terms of focus and valuation because it has been more B2B oriented. To justify some of these prices, you need 10 years of earnings, and that is very far out for venture capital.”
This comes as OpenAI raised $110 billion in a new round at a pre-money valuation of $730 billion on February 27, from Amazon, Nvidia, and SoftBank.
OpenAI reportedly expects to spend $665 billion through 2030 on training and operating its models — this is more than double its previous projections.
Anthropic, meanwhile, raised $30 billion in its latest funding round, which more than doubled the Claude chatbot maker’s valuation to $380 billion.
AI boom mirrors past tech bubble
Citing insights from John Doerr (chairman, Kleiner Perkins) and hedge fund manager Jim Simons, Morgan highlighted that while hype leads to too many companies chasing unrealistic market shares, the long-term impact of transformative technologies like AI remains significant even if the market initially overestimates short-term outcomes.
“I started investing formally in 1982, so that’s more than 40 years. What I’ve learned is that after every bubble ends, a few companies come out much stronger two or three years later. John Doerr had said in 2001-2002, ‘The internet is underhyped’. That was after the crash. He said yes, there was a crash, yes, there were too many companies, but the eventual impact of the internet on society was still nowhere near fully understood. He was right. That’s true of AI too.”