James Anderson warns Nvidia’s $100bn OpenAI bet echoes dotcom bubble

One of Britain’s best-known tech investors has warned of a “disconcerting” rise in artificial intelligence valuations, saying Nvidia’s planned $100bn investment in OpenAI brought uncomfortable echoes of the dotcom bubble.

James Anderson’s early bets on Nvidia, Tesla and Amazon turned Edinburgh-based Baillie Gifford into an unlikely star of tech investing. He returned to full-time investing in 2023 with the backing of Italy’s billionaire Agnelli family, and now runs the $1.1bn Lingotto Innovation Strategy with New York-based Morgan Samet.

Until recently, Nvidia was its biggest holding but that position has been overtaken by the Chinese battery maker CATL. Lingotto trimmed its position in the Silicon Valley chipmaker earlier in the year, while CATL’s stock has surged after it listed in Hong Kong in May.

“Up until the last couple of months or so . . . what surprised me in one sense is that there wasn’t really much sign of a bubble” in AI, Anderson said. But that changed as OpenAI’s valuation surged from $157bn to $500bn in less than a year and its main rival Anthropic almost tripled in value to $170bn over the past six months.

“I think one needs to be honest that those sudden increases [in valuation] that people were willing to place on OpenAI, Anthropic and the like were disconcerting,” he told the Financial Times this week. “That scale of jump and the pace with which it happened did bother me.”

Anderson said he remained a “huge admirer” of Nvidia but said the chipmaker’s planned $100bn investment in OpenAI, which is also one of the biggest buyers of its AI systems, presented “more reason to be concerned there than before”.

Critics of the deal have pointed to its circular structure and uncertainties over how the huge data centres envisaged by OpenAI’s Sam Altman would be financed or powered.

“I have to say the words ‘vendor financing’ do not carry nice reflections to somebody of my age,” he said, referring to the dotcom-era practice of telecoms equipment makers borrowing heavily to help their telco customers to finance the build-out of internet fibre.

“It’s not quite like what many of the telecom suppliers were up to in 1999-2000 but it has certain rhymes to it,” he added. “I don’t think it makes me feel entirely comfortable from that point of view.”

Lingotto Investment Management, which was set up by the Agnelli family’s holding company Exor, will announce at Italian Tech Week on Wednesday that the firm has appointed tech experts to a new innovation council as it pushes further into early-stage tech investing.

Among the members will be Dylan Field, chief executive of design software group Figma, Kim Branson, head of AI at drugmaker GSK, and venture capitalist Mike Volpi.

Samet said Lingotto Innovation would now be investing in start-ups from seed stage until after they go public.

“With the AI innovation super cycle, as well as advances in the physical economy, you need to go earlier to be able to figure out what’s coming down the pipe,” she said, adding that she was particularly bullish on the opportunities in autonomous vehicles and AI in healthcare.

Anderson, Samet and Volpi are among those speaking at Italian Tech Week in Turin, where John Elkann, Exor’s chief executive and chair of Stellantis, will also be on stage with Amazon founder Jeff Bezos.

Anderson’s caution on Nvidia marks a stark turnaround from his comments last year, when he said “the most optimistic outcome . . . could lead to a market cap of double-digit trillions” for the chipmaker, which is now worth $4.4tn.

In what he characterised as “personal views”, Anderson also warned the Trump administration’s efforts to decouple from China and cut investment in renewables could lead to disastrous consequences for its energy and automotive sectors.

He said: “If I’m going to America in 10 years’ time, it’s going to be a bit like going to Cuba in that you’ll have one very advanced sector [tech] but you’ll also have an automobile industry that resembles 30 years ago and you’ll have an energy system that is completely unreliable and outclassed by what’s going on in the world.”