The biggest AI fortunes may be made before the company goes public.
Listen to the audio version of this article (generated by artificial intelligence).
Editor’s note: Most people believe that the biggest fortunes in technology are made after a company goes public. My colleague InvestorPlace Luke Lango This assumption is believed to be increasingly outdated.
In today’s article, he takes a look at some of Silicon Valley’s most successful early investments — from Fairchild Semiconductor to Google to Anthropic — to explain why the biggest opportunities often appear long before Wall Street notices.
He will then share the framework he uses to identify the next wave of AI opportunities during a free online event on Thursday, July 30 at 1 p.m. ET. Reserve your seat here.
In 1957, eight young engineers working under William Shockley found the co-inventor of the transistor impossible to work with. So, they left Shockley Semiconductor Laboratory in Mountain View, California, and never looked back.
The eight soon discovered that no institution or company would support them. At that time, the suburbs and farmland south of San Francisco and north of San Jose did not yet constitute “Silicon Valley.” Tech startups in the region were not quite ready to invest in unproven ideas.
They were just frustrated engineers with no product and no revenue.
So they contacted a young financier named Arthur Rock.
Rock didn’t have the capital himself, but he was willing to bet on people he considered impressive.
He found a camera company willing to gamble $1.5 million on eight founders and an idea.
Thus Fairchild Semiconductor was born. Fairchild eventually became one of the most influential technology companies in history Intel Corporation (Intech) And dozens of other semiconductor companies are worth trillions of dollars today.
The men Shockley lost became known as the “Traitorous Eight.” They were the accidental architects of the Silicon Valley model that persists to this day.
The eight traitors: That’s Gordon Moore – of “Moore’s Law” fame – on the far left.
Credit: Intel
This same instinct resurfaced in 1998 when Andy Bechtolsheim sat down with two graduate students at Stanford University. Immediately, before their company had a recognizable business model or brand, the co-founder of Sun Microsystems wrote a check for $100,000 to Larry Page and Sergey Brin.
Anyone who has ever Googled…well…no one knows how that story ended. But for the record: That $100,000 check reportedly bought roughly 1% of the stock Googlea position that eventually became worth tens of billions of dollars.
Most recently, in 2023, Spark Capital invested $75 million Anthropic While it was still an obscure AI startup with little revenue. Today, millions of people are on a first-name basis with Claude, and that stake is worth an estimated $7 billion.
Over the course of nearly 70 years, technologies and players continue to change. The rules of play don’t do that.
Rock was backed by eight unknown engineers. Bechtolsheim supported two graduate students. Spark Capital has backed an AI startup that few people have heard of.
In each case, the biggest opportunity wasn’t buying a great company after everyone had realized it. It was a tribute to exceptional founders and companies before anyone else.
I think the rules of play themselves are more important today than they have been in decades.
First, because artificial intelligence has created an unprecedented race to develop new technologies. Second, because the companies leading the race increasingly have more money than time. And finally, because the mix is changing as some of the biggest fortunes are created in technology.
Let me explain…
Why are the Giants buying now instead of building?
There’s a reason these rules of the game have been around for nearly 70 years, and it’s not just the excitement we’re seeing today about AI.
When the prize is building the next great computing platform, speed is everything. If a startup has already solved a problem that would take your engineers two years to solve, buying that company is often much cheaper than losing those two years.
This is exactly what is happening in today’s AI race.
Alphabet Company (Google) It made this decision early, in 2014, when it acquired a British AI startup Deep Mind. Instead of spending years assembling a similar research lab from scratch, Google bought one of the world’s best AI teams outright. More than a decade later, DeepMind is at the heart of Google’s AI strategy.
Meta Platforms Inc. (dead) It reached a similar result last year when it invested $14.3 billion in it Artificial intelligence scales. The deal wasn’t just about software. Scale AI has become one of the leading providers of high-quality training data and infrastructure needed to build advanced AI models. Instead of trying to recreate that experience internally, Meta bought a seat at the table.
Microsoft Corporation (MSFT) Perhaps the biggest bet on the AI boom ever. Its $23 billion investment in OpenAI, made between 2019 and 2023, gave the company immediate access to one of the world’s leading AI developers years before it could build similar capability on its own.
This is not unique to AI. Cisco Systems Inc. (cisco) It spent much of the 1990s building a networking empire by buying up promising startups rather than reinventing the technologies themselves.
Long story short, this is not the new rules of the game. It’s old and has become more valuable.
Each of these deals happened because real value had already been created within a startup, long before Wall Street started paying attention.
That’s why I believe one of the most important shifts in investing today is the following:
An acquisition, not an IPO, is increasingly the finish line many early investors are aiming for.
The rules of the game have not changed
Even the best startup investors make mistakes sometimes. No one understands this better than the funders themselves.
Bessemer Venture Partners maintains what it calls an “anti-portfolio” — a public list of companies it had the opportunity to back but ignored. Google it. So do Apple, eBay, Airbnb, FedEx, and dozens of other hugely successful companies.
Being early is not a guarantee, but it gives you the opportunity to make a decision before the rest of the market reaches the same conclusion.
This is the common thread between Fairchild Semiconductor, Google, Anthropic, and countless other success stories. The greatest fortunes come from someone who recognizes unusual people and unusual companies before a consensus is formed.
This is the playbook. And I think it’s becoming more important again as AI reshapes the technology landscape.
The challenge, of course, is knowing what characteristics to look for when opportunities arise.
This is exactly what I want to show you during my free time 2026 AI MegaDeal Event on Thursday, July 30 at 1pm EST.
I’ll explain why I believe AI is creating a new generation of acquisition opportunities, review the framework I use to identify them, and share the one company I believe represents this shift best today.
This event is free to attend, but you must Reserve your seat In order to get an invitation.
If the history of Arthur Rock, Andy Bechtolsheim, and Spark Capital teaches us anything, it’s that the greatest investment opportunities often seem less obvious at first.
My goal is to help you put these rules of the game into practice before the rest of Wall Street catches up.
sincerely,
Luke Lango
Senior Investment Analyst, InvestorPlace
note: When you reserve your seat at 2026 AI MegaDeal EventYou will also have the opportunity to join my VIP text list. Thank you, I will send you my new report, AI Collector’s Portfolio: 7 Stocks to Buy for the Biggest Boom in Tech Spending Ever. It’s free, but you have to do it Register for this event first.
