(Bloomberg) — Lee Ainslie’s Maverick Capital, an early backer of Nvidia Corp., is starting a fund focused on artificial intelligence to capitalize on “insatiable demand” he’s predicting for the next decade.
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The Maverick Silicon fund, the first sector-specific vehicle in the firm’s 30-year history, will invest in mid- and late-stage private companies that focus on computing infrastructure to support the AI ecosystem, Ainslie wrote in a letter to investors.
Maverick, which manages $7.4 billion, put its own cash in the new fund on July 1 and will allow clients to invest ahead of its second close, which is expected before year-end.
A spokesperson for the Dallas-based firm declined to comment.
Ainslie, whose firm first invested in Nvidia two decades ago, reiterated his bullish views on AI and dismissed arguments that the recent swoon in tech stocks is a repeat of the 1999 dot-com bust. He wrote that he’s increasingly fielding questions about the parallels between that period and today’s markets, and advised younger traders not to make the comparison.
“While I appreciate that many investors only know about the internet bubble from history books (excuse me — I mean podcasts) as opposed to life experience, this question puzzles me,” he wrote. “The dynamics of the two market environments are quite different.”
Ainslie, 60, said many investors are discounting the technology’s long-term potential and are misguided in their worries that the amount of cash companies are pouring into AI infrastructure won’t justify future returns.
“We are only in the infancy of AI,” and each year companies will be able to better use AI to boost revenues and save capital, Ainslie wrote.
Companies that improve the speed and efficiency of AI computing infrastructure will be “extremely well-positioned to create meaningful value as demand for compute power will continue to be enormous in the coming years,” he wrote.
Still, Ainslie is less optimistic about a corner of tech he thinks will fare poorly with the rise of generative AI: cloud-based application software.
Companies will spend less on that technology as they prioritize investments in generative AI instead. That shift means they’ll “substitute humans with AI processors” — painful for app software vendors that determine pricing based on the number of people their clients employ, Ainslie wrote.
While he didn’t identify companies he’s betting against, Ainslie said short opportunities include “historically beloved names with tens of billions of dollars in market capitalization at risk.”
Maverick’s main hedge fund gained 12% this year through June, while its long fund advanced almost 14%, according to the letter.
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