A crypto billionaire sees AI as the biggest bubble. Why isn't he expecting a stock market crash just yet?

Michael Novogratz, the crypto billionaire and founder of the cryptocurrency conglomerate Galaxy Digital, believes that “the biggest bubble of our lifetime” has formed around artificial intelligence, according to Bloomberg. However, in his opinion, investors should not pull out of the market: the speculative frenzy surrounding AI is only gaining momentum.

“Bubbles don’t end the way the market looks today,” Novogratz said on October 7 at the Greenwich Economic Forum in Connecticut. “I know how bubbles end: they end spectacularly. And what’s happening now isn’t spectacular enough yet,” he believes.

The rise in AI-related stocks has already helped the S&P 500 hit a new all-time high this week, while Nvidia’s market capitalization has approached $6 trillion. At the same time, the cost of long-term borrowing is rising. This poses a threat to the bull market, which relies heavily on hyperscalers’ investments in AI infrastructure—investments that are increasingly financed by debt. But Novogratz believes this isn’t enough yet to halt the rally, according to Bloomberg. Moreover, in his view, the stocks of AI-related companies still cannot be considered expensive relative to their earnings.

"If you haven't invested in AI, you might as well just go home and stick your head in a bucket of ice," he said.

For Novogratz, the strategy of investing in risky assets is nothing new. Back in 2017, Novogratz called the frenzy surrounding cryptocurrencies “the biggest bubble of our lives.” But even then, his conclusion wasn’t that one should stay away from crypto assets. On the contrary, Novogratz was preparing to raise $500 million for a cryptocurrency fund, hoping to profit from the market’s continued growth. Now he’s applying a similar line of reasoning to artificial intelligence: the existence of a bubble, in the trader’s view, doesn’t necessarily mean the rally is nearing its end.

At the same time, Novogratz himself is directly betting on the continuation of the AI boom. Galaxy is developing the Helios data center in Texas for AI and high-performance computing. “What began as a scaling-up of our Bitcoin mining operations soon turned into something more,” the company said in one of its press releases last year. CoreWeave has leased 526 megawatts of IT capacity at the Helios data center campus for 15 years. Galaxy estimates that once all contracted capacity is operational, it will generate more than $1.2 billion in average annual revenue for the company over the term of the lease.

Before entering the crypto industry, Novogratz worked on Wall Street for more than two decades: he was a partner at Goldman Sachs and later headed the macro fund Fortress Investment Group. In 2013, he began investing in Bitcoin and later founded Galaxy Digital, becoming one of the most prominent investors in crypto assets. In 2008, Forbes magazine included Novogratz on its list of billionaires. According to the magazine’s latest estimates, the trader’s net worth is $5.2 billion.

This article was AI-translated and verified by a human editor