AI Startup Thinking Machines Raises $50 Billion Valuation With No Product
"A company named Thinking Machines, which is an AI startup by former OpenAI executive Mira Murati, just raised about $2 billion in its seed round at about a $10 billion valuation. Yet the company doesn't have a product, nor do they even tell investors what plans they have for a product. So one investor went to a pitch with Murati, and Murati said, we're doing an AI company with the best AI people, but we can't answer any questions. And if you think that's completely wild, with this first seed round taking place sometime around October 2025, there's actually news today that the same startup is now seeking another funding round, valuing the business at $50 billion."
About this episode
On this episode of The Investor's Podcast, host Kyle Grieve delivered a deep analysis of asset bubbles using Ron Insana's framework from the book Trend Watching, focusing intensely on whether AI is entering bubble territory. Grieve opened by explaining why bubbles matter to concentrated investors like himself, emphasizing that recognizing bubble patterns is essential to long-term survival. He walked through historical bubbles ranging from 1850s plank road companies to the dot-com crash, illustrating how human psychology, easy money, and technological hype repeatedly create boom-bust cycles. Central to the episode was Insana's five-stage bubble framework: eureka moment, easy money, government largesse, auspicious economic conditions, and external stimulants. Grieve then applied this framework to today's AI boom, revealing striking data: AI startups like Thinking Machines raised funding at $10 billion valuations with no product and are now seeking $50 billion valuations within months. He cited JPMorgan analysis showing the AI infrastructure buildout requires $5 trillion, forcing Magnificent Seven companies to issue 30-year bonds despite strong balance sheets. Yet Grieve stopped short of declaring AI a full bubble, noting that favorable economic conditions and mass public participation—two key bubble ingredients—are not yet fully present. He presented contrarian data showing Nvidia's forward P/E is actually lower than the S&P 500's despite its AI leadership. Grieve closed with practical advice: cap exposure to narratives, focus on fundamentals, verify that winners are compounding intrinsic value rather than just expanding multiples, and observe deal-making behavior for signs of speculative excess. He warned that transformative technology does not guarantee investor success, citing the early auto industry's less than 1% survival rate among hundreds of manufacturers.
Key takeaways
- AI startup Thinking Machines raised funding at $10 billion valuation with no product, now seeking $50 billion valuation within months according to recent reports.
- JPMorgan analysis shows AI infrastructure buildout requires $5 trillion investment, forcing Magnificent Seven to issue 30-year bonds at 5.7% despite holding only $350 billion cash.
- The S&P 500 trades at 31x P/E but removing Magnificent Seven leaves the remaining 493 companies at just 19x earnings, showing concentration risk.
- Nvidia's forward P/E is 24x versus S&P 500's 27x despite 44x trailing P/E, as analysts forecast 60% EPS growth next year and 50%+ compounding through 2027.
- Grieve applied Insana's five-stage bubble framework to AI but concluded key ingredients like favorable economic conditions and mass public participation are not yet fully present.
- Historical parallel drawn to early 1900s auto industry where hundreds of manufacturers existed but only three survived, yielding less than 1% survival rate.
- Grieve advised investors to focus on businesses already leveraging AI profitably rather than speculating on infrastructure buildout or pre-revenue startups.