When watching the news, reading newspapers or watching podcasts, somehow there is always a article or topic about a company that spend a ridiculous amount of money on investments in AI. Whenever I come across one of these stories, I can’t help but wonder if such a large investment is worth it.
Take meta for example they reportedly offered Andrew Tulloch, the co-founder of Thinking Machine Lab, as much as 1.5 billion dollars over at least six years (Jin, B and Hagey, K, 2025) or the reported offer to Matt Deitke for 200 millions (The New York Times, 2025). All this money for just one person, how could this in any way be profitable?
But it is not just meta that are throwing large amounts of money in search of AI experts NVIDIA spent over 900 million to hire personnel from the AI company Enfabric (Kolodny et al., 2025) and Google reportedly offered 2.4 million billion dollars to Varun Mohan, the cofounder of Windsurf.
This strategy of spending hundreds of hundreds of millions dollars on the top guys of AI startups seems like betting everything on black in roulette, because it was your favourite colour. The thought that a few people, who had leadership positions in AI companies, are such geniuses that they are the key ingredient in revolutionizing the AI industry seems simplistic. In reality progress is not driven by the talent of the few, but it depends on workforces, infrastructure, and market readiness. The arms race of getting the top talent is only leading to inflating the costs without guarantying returns.
References:
- A.I. researchers are negotiating $250 million pay packages. just like N.B.A. stars. (2025). The New York Times. https://www.nytimes.com/2025/07/31/technology/ai-researchers-nba-stars.html
- Kolodny, L., Novet, J., & Leswing, K. (2025, September 18). Nvidia just spent over $900 million to hire Enfabrica CEO, license AI startup’s technology. CNBC. https://www.cnbc.com/2025/09/18/nvidia-spent-over-900-million-on-enfabrica-ceo-ai-startup-technology.html
- Jin, B and Hagey, K (2025). Thanks for Your $1 Billion Job Offer, Mark Zuckerberg. I’m Gonna Pass. The Wall Street Journal. https://www.wsj.com/tech/ai/meta-zuckerberg-ai-recruiting-fail-e6107555
I agree with you, on the fact that the market news is flooded with AI investments and AI firms. Do you think that the AI stocks are over-valued right now or is it appropriately priced? In the early 2000s, there was a big tech stock drop, do you anticipate similar event to occur?
I think in most cases AI is used by companies as a way to hype up or attract investors instead of actually improving customer experience. Major tech companies want to appear as leaderds in this new technology to boost their stock price, using AI as a signal to shareholders that they are still innovative. I also expect a big tech stock decline once the hype slows down, like the .com bubble. I also think that even without the AI hype, some companies within the S&P 500 are over-valued due to being such a populair investment option. Many investors only look at the increases in worth of their held stocks, rather than paying attantiong to what the companies are actually doing.