Private Markets Offer Opportunity Amid AI Slowdown

Eden Shochat, an Israeli venture capitalist, was watching a video in 2009 that left him speechless. The demonstration from PrimeSense's technology showed a person moving in front of a camera with a digital skeleton mirroring their movements in real-time.

This technology eventually went into Microsoft's Kinect gaming system and Apple bought PrimeSense for $350 million in 2013. One of the founders, Aviad Maizels, later started Q.ai, which focused on audio, machine learning, and subtle facial movements.

Shochat invested in Q.ai after seeing a prototype that seemed too ambitious to believe. This time, Apple acquired Q.ai for $2 billion, a reported price approaching $2 billion. The acquisition was already finalized before most investors heard about it.

The AI industry is debating whether to slow the development of its most powerful models, causing investors to wonder what this means for AI companies' growth and their current stock values. Smaller companies are working on turning existing AI technology into something customers will pay for, which could mean helping factories spot defective parts or teaching robots to perform useful tasks.

These businesses don't necessarily need more powerful models to grow; they just need to make the existing technology reliable, affordable, and useful enough to win customers. This creates an opportunity in private markets during a public-market slowdown: owning companies whose next stage of growth comes from solving practical problems while publicly traded AI stocks cool down.

Anthropic CEO Dario Amodei called for a more deliberate pace of frontier AI development, but investors should focus on what this means. There's still an enormous amount of work between demonstrating impressive capabilities and making them useful every day, which creates businesses that can continue growing even if the stock market rally cools down.