Billionaire investor Howard Marks lays out why valuing AI companies like Anthropic is so tricky

Howard Marks is the co-founder and co-chairman of Oaktree Capital Management. Christopher Pike/Bloomberg via Getty Images Howard Marks just highlighted one of the hardest parts of investing in AI companies.Value investors like him try to project a company's earnings five years from now to gauge whether a stock is attractively priced today, he said on "Bloomberg: The China Show" on Monday."I don't think we can do that with much of AI," Marks said.He gave the example of Anthropic, the AI company behind Claude that recently filed to go public in what could rank among the biggest IPOs in history."Can we really fool ourselves into thinking we know what it will do five years from now?" Marks asked. "And yet, that doesn't mean we don't want to be in it."Anthropic's cofounders wrote in its IPO prospectus that they "will be constantly seeking to reinvent our business, releasing new classes of products whose aim is to dwarf the economic value of our existing ones."They noted that advances in AI enabled chatbots in 2022 and coding agents last year, and this year have been gradually making it viable to use agents for broader knowledge work and scientific discovery.Marks, the billionaire cofounder and co-chairman of Oaktree Capital Management, said that in six decades of investing, he's never dealt with something like AI "in terms of its inscrutability, its novelty, its speed of progress, its autonomy, and its unpredictability."However, he noted the AI boom's recent "stumbles" — such as investors dumping Alphabet and Amazon stock last week on concerns about their AI spending — have "somewhat burst the bubble of infallibility." The Nasdaq 100 slumped by roughly 1,400 points, or nearly 5%, over the course of Thursday and Friday last week. But the tech-heavy index is still up about 13% this calendar year, and has soared by around 160% since the end of 2022, from under 11,000 points to just below 28,400 points.Marks, who's been sharing wisdom and advice in his memos for over 35 years, said it's "very healthy" that investors are trying to control their excitement and be a little more "thoughtful" and "skeptical."The distressed-debt investor said that instead of worrying about how a stock is performing on a single day, investors should "put together a portfolio of things that will work in the long run, and stay with it.""There is no reward in the investment business for hyperactivity," he said.One of Marks' key influences, Warren Buffett, has championed long-term investing for decades. The conglomerate he built, Berkshire Hathaway, finished building large stakes in Coca-Cola and American Express in the mid-1990s, and hasn't touched them since.Buffett, who stepped down as Berkshire's CEO at the end of 2025 and as its chairman this September, issued a similar caution about the AI boom in a July interview."It's tough to find values when everybody is preferring gambling," the legendary bargain hunter said. He also emphasized that so-called hyperscalers such as Meta and Microsoft are spending hundreds of billions of dollars on microchips, data centers, and other AI infrastructure, describing that as "real money."Another prominent value investor, Michael Burry of "The Big Short" fame, has repeatedly warned that AI is a bubble destined to burst. He's made the case on his Substack that AI companies are overinvesting, and pointed to their aggressive accounting, hidden debts, and circular deals as red flags. Read next Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Theron Mohamed is a London-based correspondent on the International team at Business Insider. His coverage spans finance, investing, wealth, markets, and the economy.Theron joined BI in 2019 as a reporter at Markets Insider and rose to the rank of correspondent before moving to the Trending team then the broader International team. He previously covered tech, media, and telecom stocks for Investors Chronicle magazine and had a brief stint on the Financial Times' Data team. He interned at the Wall Street Journal in New York where he primarily wrote for Heard on the Street.Theron has freelanced for The Independent, The Telegraph, WIRED, and several smaller publications. He holds an undergraduate degree in geography from the London School of Economics, and a master's degree in journalism from Columbia University.Theron often covers Warren Buffett, Michael Burry, and other elite investors. He also writes about the world's wealthiest people and shares financial advice from all manner of rich and successful people.Email Theron at tmohamed@businessinsider.com and follow him on X @theron_mohamed. Finance Anthropic AI More Stocks Billionaires Warren Buffett nasdaq 100