Brad Gerstner, founder and CEO of Altimeter Capital, views market volatility in tech ETFs such as Vanguard Information Technology ETF (VGT.US), iShares U.S. Technology ETF (IYW.US), and Technology Select Sector SPDR Fund (XLK.US) as a positive indicator of the sector's long-term health, especially as AI reshapes the technological landscape. In an interview, the tech investment executive highlighted how companies like NVIDIA have seen massive growth, adding nearly $200 billion in revenue over the past three years despite significant stock fluctuations. He noted that while NVIDIA experienced a 25% drawdown earlier this year, its current P/E ratio stands at around 23-24x.
"Volatility effectively moderates market bubbles, and these periodic adjustments prevent unsustainable tech bubbles from forming," Gerstner remarked. He also expressed optimism about the competitive dynamics among major AI players, including Alphabet and OpenAI, advising investors to consider holding shares in multiple giants rather than betting on a single winner. "It's hard to pick one winner here, so you can own them all," he said, specifically pointing to Alphabet's recent advancements with its Gemini AI model.
Gerstner emphasized that enterprise AI adoption represents a major opportunity, predicting a "golden age of margin expansion" and a "significant productivity boom" as AI capabilities integrate into industrial workflows. He likened the current AI revolution to Tesla's manufacturing innovations, describing it as "machines that build machines" due to its potential to radically transform industrial efficiency.
However, the investment executive cautioned that not all AI-focused companies will succeed. "There are 1,000 Silicon Valley companies valued at over $1 billion trying to raise capital—this race is intense, and for every winner, there will be losers."
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