Cisco CEO: Private Company Valuations Are “Nuts”

This week’s World Economic Forum event is buzzing about AI.

The annual World Economic Forum is underway in Davos, Switzerland this week, as leading lights from the business, politics, and economic realms gather to sip Sapphire martinis and discuss the big issues vexing governments, NGOs, and businesses all over the world.

One issue that’s getting significant attention in Davos this week is the impact artificial intelligence is having on private company valuations.

Take Cisco CEO Chuck Robbins, who told a WEF panel hosted by CNBC that private company valuations are “going nuts again.”

Institutional investors are largely in line with that thinking, although not in so many words. According to a December, 2023 survey by Natix, private assets “continue to hold their luster for institutions as 64% are bullish on private equity.”

Simultaneously, 72% are concerned that “valuations do not reflect company fundamentals,” Natix states. “But 80% of those surveyed and 91% in North America believe that 2024 is a year in which markets will recognize that valuations matter.”

FOMO In-Play

Artificial intelligence’s steady march into the finance sector certainly has much to do with that sentiment.

“When you get into generative AI and some of these other things, we are seeing some of the private valuations are going nuts again,” Robbins noted. “It’s ironic we’re doing this so quickly after we experienced (with the end of easy money, low-interest financing) 48 months ago. It’s just incredible,” he said.

It’s not only Robbins. Nasdaq CEO Adena Friedman, also speaking on the CNBC panel, said market mavens investors are “hyper-focused” on AI breakthroughs, with a heavy dose of FOMO in play.

“When it comes to AI, they’re just afraid they’re going to be left behind again,” she told the audience. “They are going to get wrapped up in what’s the next wave, what’s the next potential. They don’t want to get left behind, they want to be early.”

“The challenge to them is now they have a real cost of capital and the companies that they’re investing in have a real cost of capital. That’s a very different investment thesis,” Friedman added.



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