Ian Verender

And they just determine what the price is and then say, well, because this is what we've raised this small amount of capital at, that then translates into the company being worth vast amounts of money.

It's only when you really list on the public markets where you've got

large volumes of shares available to be bought and sold, we can get an accurate estimation of what the company's worth.

Well, I mean, you've only got to hark back to the tech wreck or the tech boom of 2000.

The difference this time around, though, is that it's been driven, at least in the initial phases, by companies, very big and very profitable companies like Microsoft and Google and so forth.

And they've been funding their development out of

So out of profits, whereas back then during the dot-com boom, you had a whole lot of companies essentially listing on the stock market, raising cash, burning through that cash, then raising more and more and more, all on the promise that they were going to make vast profits down the track.

Now, this, again, is all based on making huge amounts of money out of AI down the track, and the valuations are...

essentially baked in that we're going to make a lot of money here, but not everyone is going to be a winner in this race.

And that's something that I think everybody needs to be wary of.

If you're putting your money into a company that has a huge

cash generation engine there in the background that's partially funding this, you're probably on safer ground than going directly into an organization that really doesn't earn a lot of money at the moment, but it's just all promising blue sky down the track.

It really, I think, heightens the risk because you've got, as you say, cross-pollination.

You've got one company agreeing to spend a vast amount of money on another company's engineering or chips or in exchange for that company then taking the services from the company.

It's really interlinked in such a complex way.

And really just think back to, I guess, the global financial crisis where you had financial institutions that were incredibly interlinked with their lending and the money transfers between them.

And of course, when things started to turn pear-shaped, nobody quite knew exactly how exposed one bank was to another bank.

And so as a result, everybody just headed for the hills and wouldn't invest in banks.

Banks wouldn't lend to one another.

because they didn't know how exposed other institutions were to this property market collapse in America.