Tom Shaughnessy: Investment focus is shifting from crypto to AI, retail investors prefer AGI stocks over Bitcoin, and upcoming AI IPOs may face financial disclosure challenges | Unchained

Key takeaways

• Investment focus is shifting from crypto to AI, impacting crypto market interest.
• Retail investors are more enthusiastic about AGI stocks than Bitcoin.
• Businesses face spending limits when moving from subscription to API models for AI.
• Companies are seeking cheaper AI alternatives, turning to open-source solutions.
• Upcoming AI IPOs might perform well initially but face challenges with financial disclosures.
• Enterprises becoming cost conservative could affect sector growth negatively.
• AI companies may see a slowdown in revenue growth due to high costs.
• Open-source AI models offer significantly cheaper access, promoting user switching.
• Enterprises are hitting spending walls, altering market usage patterns.
• Current incentive structures may impede AI model development due to data sharing issues.
• Financial pressures are influencing enterprise technology adoption.
• The shift in investment priorities highlights changing market dynamics.

Guest intro

Tom Shaughnessy is a Founding Partner at Delphi Ventures, where he focuses on crypto and emerging technology investments. He also co-founded Delphi Digital and became widely known for identifying how open-source AI and inference costs could pressure the current AI business model.

The shift from crypto to AI investments

• Crypto markets are experiencing significant outflows to AI deals, impacting investor interest in crypto.

  — Tom Shaughnessy

• Investors are eager to participate in AI ventures like OpenAI and Anthropic.

• I think headline for the overall trend has just been outflows to ai deals like people have been killing themselves to get into second third fourth layer spvs for openai anthropic and a whole host of names below them.

  — Tom Shaughnessy

• Retail investors prefer AGI stocks over Bitcoin, reflecting a trend shift.

• They wanna buy agi stocks right they wanna tell their friends they’re in it they wanna be part of the story and they use these products all day and they’re exciting right and they’re more exciting than owning bitcoin right now.

  — Tom Shaughnessy

• The excitement around AI stocks is driven by their perceived potential and everyday use.
• This shift could lead to a reevaluation of investment strategies in the crypto space.
• Understanding the current sentiment among retail investors is crucial for future market predictions.

Challenges in AI service cost structures

• Businesses face financial hurdles when transitioning from subscription to API models.

• Businesses are hitting spending limits when transitioning from subscription models to API models for AI services.

  — Tom Shaughnessy

• The cost of AI services can quickly escalate, limiting usage.

• When you get a chatgee g gpt or anthropic subscription you get a ton of usage…once you shift from a subscription to an api model you hit a wall really quick on spend…$200 a month gets you about $8 worth of api spend…

  — Tom Shaughnessy

• Companies are questioning AI usage costs and seeking alternatives.
• Open-source inference providers offer a cost-effective solution.

• Companies are starting to question where can I get my ai usage without paying a zillion dollars…open source inference providers provide this solution…

  — Tom Shaughnessy

• The financial challenges highlight the need for more sustainable AI service models.

The impact of upcoming AI IPOs

• Upcoming IPOs may initially perform well due to low floats and passive capital.

• The upcoming IPOs may perform well initially due to low floats and passive capital, but could face challenges as financial disclosures reveal more about their operations.

  — Tom Shaughnessy

• Passive capital and index funds are eager to access these IPOs.
• Financial disclosures could reveal operational challenges, affecting investor sentiment.

• I think they do well out of the gate for a couple of reasons the first one is the floats are pretty low… there is a lot of passive capital index funds folks that wanna access… the part where it gets tricky is historically people have aped in these companies because of the stories and the incredible technology with limited to no financials…

  — Tom Shaughnessy

• Investors need to be cautious of the stories versus the financial realities.
• The performance of these IPOs could set a precedent for future AI market entries.

Enterprise cost conservatism and its effects

• Enterprises are becoming more cost conservative, impacting sector growth.

• The trend of enterprises becoming more cost conservative could negatively impact the revenue and growth of companies in the sector.

  — Tom Shaughnessy

• Cost conservatism could disrupt the growth flywheel in the AI sector.
• Enterprises are reassessing their spending strategies in light of economic pressures.
• This trend could lead to a slowdown in innovation and expansion.
• Understanding enterprise spending trends is crucial for predicting sector growth.
• The shift in enterprise behavior reflects broader economic and market challenges.

The slowdown in AI revenue growth

• AI companies face a potential slowdown in revenue growth due to high costs.

• There will be a slowdown in revenue growth for AI companies due to high costs.

  — Tom Shaughnessy

• High operational costs are a significant barrier to sustained growth.
• Open-source alternatives offer a cheaper way to access AI models.

• AI models can be accessed at significantly lower costs through open-source alternatives, making it easier for users to switch between them.

  — Tom Shaughnessy

• The availability of open-source options increases competition in the AI market.
• Companies need to innovate to maintain their competitive edge amidst cost challenges.

Financial pressures and enterprise technology adoption

• Enterprises are hitting spending walls, affecting technology adoption.

• Enterprises are facing a wall on spending, which is shifting usage patterns in the market.

  — Tom Shaughnessy

• Financial constraints are leading enterprises to reevaluate technology investments.
• This shift could influence the development and adoption of new technologies.
• Enterprises are seeking more cost-effective solutions to maintain competitiveness.
• The financial pressures highlight the need for adaptive strategies in technology adoption.
• Understanding these dynamics is essential for predicting future market trends.

Incentive structures and AI development

• Current incentive structures may hinder AI model development due to data sharing reluctance.

• The current incentive structures may hinder the development of better AI models due to data sharing reluctance.

  — Tom Shaughnessy

• Data sharing is crucial for advancing AI models, but current incentives discourage it.

• There’s just so many weird little things where the way the incentives are currently set up people are it’s trending in the direction where we won’t actually get what we want…

  — Tom Shaughnessy

• Aligning incentives with development goals is necessary for progress.
• The reluctance to share data could slow down innovation in AI.
• Addressing these incentive issues is critical for the future of AI development.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.