Brad Gerstner, founder of Altimeter Capital, argues that the current AI market rally is driven by earnings growth rather than speculative hype. He notes that market earnings increased by 26% year-to-date in 2026, largely due to AI infrastructure spending, while valuation multiples have contracted.
Gerstner highlights Nvidia as an example, noting it trades at a forward multiple of 14 times projected GAAP earnings for next year. He describes current AI demand as unconstrained, identifying supply as the primary bottleneck. SpaceX plans to add 10 GW of compute capacity in 2027, representing 25% of total US capacity.
Data from AI labs shows rapid revenue growth, with Anthropic reaching an 11 billion USD monthly run-rate between January and March 2026, up from 2 billion USD. Gerstner estimates that leading AI labs must scale annual revenues from 100 billion USD to over 180 billion USD to justify ongoing capital expenditures by hyperscalers like Microsoft and Amazon.
Despite his long-term bullish outlook for 2027 and 2028, Gerstner confirmed that Altimeter Capital has reduced its exposure to AI investments to a three-year low. He suggests investors monitor revenue targets at AI labs to determine if earnings growth remains sufficient to support current valuation levels.
