Blackstone, KKR, Apollo, Carlyle, Ares, CVC, etc., the leading private equity, real estate and private credit asset management firms are investing more than 32 % of their new funds' assets in artificial intelligence, AI data centers companies, AI technology companies shares and loans to AI technology companies, according to Wolfteam Ltd.'s estimates.
Private equity firms tend to value firms on Earning Before Interest Taxes and Depreciation, EBITDA multiples. Wolfteam Ltd.'s corporate opinion is in agreement with the late great investor Charlie Munger that EBITDA is not a very good approximation for profitability. Especially, given the fact that data centers are depreciated on a 20 year time schedule by the hyperscalers Amazon, Microsoft, Alphabet, Meta and other technology firms.
A much better measure would be the common Price/Earnings ratio. If artificial intelligence, AI's companies Price/Earnings ratio exceeds 55, this could be deemed a bubble, according to Wolfteam Ltd.'s projections and estimates.
A Price/Earnings ratio of 55 for an AI technology company would incorporate 20 % yearly revenue growth, with net profit margins exceeding 17 % per year and US GDP growth of 5.7 % per year for the next 15 years. Which is simply a low probability assumption, according to Wolfteam Ltd.'s estimates.
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