Billionaire investor Howard Marks has warned that the rapid pace of artificial intelligence development could become a major vulnerability for the companies currently dominating the industry, questioning how long their technological advantages will last as competition intensifies.
In his latest investment memo, the co-founder of Oaktree Capital Management argued that the speed of AI advancement makes it difficult to assess the long-term value of companies such as OpenAI and Anthropic. Their rapid rise has demonstrated the commercial potential of the technology, but it has also exposed how quickly new competitors can emerge and challenge established players.
Marks’ warning comes as Anthropic prepares for a major initial public offering, which is expected to attract substantial investor attention. The company’s public-market debut will provide an important test of appetite for AI businesses whose valuations depend heavily on expectations of continued technological progress, revenue growth and their ability to maintain a competitive position.
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“Perhaps the most startling characteristic of AI is the speed at which it makes progress,” Marks wrote. “In that connection, I’m struck by the fact that today’s leading model labs, OpenAI and Anthropic, were unknown to most of us just a few years ago.”
For investors considering Anthropic’s offering, the observation raises a fundamental valuation problem: the companies attracting the largest investments today may not necessarily remain at the forefront of the industry over the next decade.
Marks’ concern is not that AI development will lose momentum, but that its pace could make today’s market leaders vulnerable to displacement. Companies that establish an advantage through advanced models, infrastructure and customer adoption may find it difficult to preserve that position as competitors develop alternative systems.
“If companies can forge ahead that fast in the world of AI, can they likewise be supplanted by others, or at least challenged?” he asked.
The question matters more to the business models of OpenAI and Anthropic. Both companies have built their positions around developing more capable AI models and selling access to businesses and consumers. Their growth has attracted substantial capital, while rising enterprise adoption has strengthened expectations that AI could become a major source of future technology revenue.
However, technological leadership does not automatically translate into durable market power. A model that performs better today can lose its advantage as competing developers improve their systems, introduce cheaper alternatives or develop products that serve specific business needs more effectively.
This reality has resulted in uncertainty for investors attempting to estimate future earnings and assign valuations to AI companies. Traditional valuation methods rely on assumptions about revenue growth, margins, and competitive positioning over several years. Those assumptions become harder to sustain when the underlying technology and the identities of leading companies can change rapidly.
Marks also pointed to the financial and technical resources available to major technology companies, including Microsoft, Amazon and Alphabet. Their existing cloud businesses, research capabilities and access to capital give them the capacity to develop competing AI products and challenge specialist model developers.
The large technology groups have advantages that extend beyond model performance. They already maintain relationships with corporate customers, operate extensive cloud infrastructure and have established distribution channels through which AI services can reach businesses. Those capabilities could make competition difficult for independent AI developers, particularly if the cost of building and operating advanced models remains high.
Marks used the history of the technology industry to illustrate how quickly market leadership can change.
“Microsoft, Amazon, Apple, and Google came through that era as winners, but Napster, Yahoo, and Netscape fell by the wayside,” he wrote. “It takes a lot to maintain a lead in a rapidly changing technology.”
The comparison suggests that investors should be cautious about treating current prominence as evidence of lasting dominance. Companies that once appeared central to the future of technology have lost relevance, while others that survived successive waves of disruption built businesses capable of adapting to new markets and competitive pressures.
Anthropic’s IPO Faces a Longer-Term Valuation Test
Anthropic’s planned listing brings these concerns into sharper focus. Its public-market valuation will be shaped by expectations about future growth, but investors will also need to assess how much of that growth can be sustained as competition increases.
A strong trading debut could signal substantial demand for exposure to AI, but Marks’ argument suggests that short-term market performance may offer little evidence about the company’s position several years from now.
“If the competitive picture can shift as I suggest, how much is a stake in today’s leaders worth?” he asked.
The question goes beyond Anthropic. It applies to the broader group of companies attracting large investments on the expectation that AI will become a defining technology across industries. Investors must consider not only the size of the market but also which companies will capture its profits as products improve and competition reduces the cost of delivering AI services.
For specialist developers, maintaining an advantage could require continuous spending on computing infrastructure, research, talent and product development. That has resulted in a demanding financial equation: companies must invest heavily to remain competitive while also demonstrating that their products can generate sufficient revenue and margins to justify the expenditure.
Large technology companies, meanwhile, can use existing businesses to support AI investment and distribute products through established platforms. This does not guarantee that they will outperform specialist developers, but it gives them resources and commercial advantages that investors cannot ignore.
Marks urged investors to concentrate on where today’s technology leaders might stand within the next decade rather than focusing primarily on short-term milestones, such as whether Anthropic shares rise or fall on their first day of trading.
His warning introduces a distinction between the growth of AI as a technology and the investment returns available from individual companies. AI adoption could expand substantially while some of the businesses currently leading its development lose market share or struggle to generate returns commensurate with their valuations.