Episode summary
How AI is Changing the Private & Public Markets
How I Invest With David Weisburd
· · 1 hr 1 min · Hosts: David Weisburd · Guests: Warren Gibbon
Summary
Warren Gibbon argues investors should re-underwrite the case for private markets rather than assume they will keep outperforming public equities. He says the last 20 years benefited from falling rates, lower competition, and multiple expansion, while today private equity faces higher real rates, more capital chasing the same deals, and tougher underwriting assumptions. In his view, that makes operational skill and true company-level value creation far more important than financial engineering.
He is more constructive on public markets than many private-market allocators, pointing to powerful earnings growth at large technology companies and a broad S&P earnings boom. At the same time, he is cautious about the AI infrastructure capex cycle, noting that hyperscaler spending already represents around 70% of total corporate US capex. He thinks investors should be careful about both overbuilding and underestimating the beneficiaries such as chip and memory suppliers.
On venture, Gibbon sees a market that is increasingly concentrated at the top, with a handful of firms capturing most fundraising and founder attention. He still sees opportunity in specialized emerging managers, especially those with a clear right to win in narrow use cases or sectors like healthcare and logistics. Across asset classes, he emphasizes patience, liquidity planning, and a simple first-principles approach to underwriting.
Key takeaways
- Gibbon says investors should re-underwrite private equity because declining rates and easy multiple expansion were a major tailwind that may not repeat.
- He thinks higher real rates and more competition make it harder for GPs to earn the same returns without stronger operating improvement.
- Gibbon says public markets have been underappreciated because large tech companies have combined growth, margins, and free cash flow at unusually strong levels.
- He is cautious on AI infrastructure capex, arguing hyperscaler spending is already around 70% of total corporate US capex and could keep rising.
- In venture, he sees capital concentrated in a small set of firms, but says specialized emerging managers can still win if they have a clear right to win.
- He would deploy fresh capital patiently, favoring opportunistic credit, volatility-sensitive strategies, and liquidity discipline.
Notable quotes
“investors today really need to take a hard look at that thesis”
“my number one recommendation for investors and how we're thinking about it here at BFA is reunderwite what you're thinking as regards private investments”
“If you add up hypers scale investment this year, it's around 70% of total corporate US capex”
“the amount of capital that's gone in to these markets is obviously very significant”
“we think healthcare is a sector that is also ripe for the application of AI”
How the episode opens
When you look at these companies plowing in these massive amounts of earnings into infrastructure, specifically data centers, what do you think about that? — If you add up hypers scale investment this year, it's around 70% of total corporate US capex. It's an enormous number and it's probably going to increase next year too. What I do wonder is that the beneficiaries of the AI infrastructure spend, chip companies, memory, I'd be careful about underrating that. There's a massive bifocation in venture where 12 firms are accounted for about 3/4 of the the fundraising this year.
You are not bearish on private equity today. Why? — Most investors today still believe that the private markets will outperform the public markets. What do you think?
I think investors today really need to take a hard look at that thesis. Um you know when I look at uh private markets a lot of the data that people focus on is data that is really over the last 20 years or really over the last say 40 years and one of the biggest things that happened in that period as we all know is we had a period of declining interest rates which acted as a strong I think tailwind to returns and more than that we're looking at a period where you know equity markets had some volatility. I mean one example I can give you is I've seen quite a few studies looking at the period 2000 to 2020 that 20 year two decade period and obviously you're really comping off an equity market that was very overvalued in 2000 and then subsequently had pretty poor performance today my number one recommendation for investors and how we're thinking about it here at BFA is reunderwite what you're thinking as regards private investments why you think it makes sense today and really getting back to it sort a first principles approach which is what are my underlying securities?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private markets vs public markets
- ai infrastructure spending boom
- private equity headwinds
- venture capital allocation
- passive investing risks
Companies and tickers mentioned
- Juniper Square
- AlphaSense
Watch the episode
Watch “How AI is Changing the Private & Public Markets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
