Veteran tech investor Dan Niles says free AI models are cutting prices and slowing revenue at top AI firms, which could mean a bumpier ride for AI stocks.
Dan Niles, founder of Niles Investment Management, says revenue growth is slowing at leading artificial intelligence companies. His main reason is that free, open-source AI models are pushing down what those companies can charge. He says buyers of tech stocks should be choosy.
Niles is a veteran tech investor. He points to token prices, which is the fee AI companies charge for the text their systems read and write. Open-source models, which anyone can use without paying a license, are putting pressure on those prices.
He also cites steeper financing costs and delayed public listings, meaning some companies are putting off their stock market debuts. In his view, valuations, or the prices investors put on these companies, must adjust.
The material does not say how much revenue growth has slowed, which companies he means, or how far he thinks valuations should fall. It also does not give a timeline. This is one investor's view, not a measured industry result.
One veteran investor says cheaper AI is squeezing AI company revenue, so AI stock returns may be bumpier while business tools get cheaper.
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