Investor Chamath Palihapitiya may be best known for his time bringing SPACs to market, but this time he's sounding an alarm about technology stocks and the impact of artificial intelligence on asset prices and valuations.

Chamath's Warning

Palihapitiya enjoyed a nice return on his investment in AI company Groq after the company was purchased by NVIDIA Corporation (NASDAQ:NVDA). Now, Palihapitiya is warning about what AI means for high-growth and high-risk technology stocks.

"I struggle to see a transient explanation – meaning some temporal reason that won't be here at some point soon. I think AI is causing a structural reset to how risky assets are priced. A digital super-god means both that you can disrupt someone else but that, in short order, someone else can disrupt you," Palihapitiya tweeted.

The tweet was in response to a post by market expert Ryan Detrick sharing that price-to-earnings multiples are down 18% and EPS growth is trending higher, which could be a bullish combo.

So what exactly is Palihapitiya saying?

Well first by saying he doesn't see a transient explanation, the investor is warning that there is no temporary reason for what's happening, like a one-off event like interest rates, or bad earnings across the entire technology sector. Instead, Palihapitiya believes the current struggles for risky assets pricing is here to stay.

Palihapitiya's call for a "structural reset" could be one of the most important pieces in his tweet, as it means there is a permanent change here or coming for the pricing of risky assets thanks to artificial intelligence.

The investor's tweet could highlight that paying premium values for technology stocks based on future growth could be coming to an end as price-to-earnings multiples come down.

In the tweet, Palihapitiya labels the advanced artificial intelligence as "digital super-god" that can let individuals and companies create new products. The double-edged sword for the "digital super-god" could be that while a company can use AI to disrupt competition, its competitors, both old and new, can do the same to disrupt a company back.

Palihapitiya signals that there is less of a competitive advantage thanks to the growth of artificial intelligence.

What's Next For Tech Stocks?

"As a result, you don't want to pay a large premium for the future. A sustained repricing has huge implications for tech companies' debt loads and SBC," Palihapitiya also tweeted.

With disruption happening faster and from newer and smaller companies, investors may be less willing to pay higher valuations for technology stocks, on the hope of future profits, which is what Palihapitiya could mean here.

Technology stocks have often had higher price-to-earnings ratios, with investors paying for future growth in the sector.

The warning from Palihapitiya could mean that investors should treat technology stocks more like other sectors and focus on trailing revenue and multiples, or on short-term financials based on bookings and guaranteed revenue, rather than on future growth.

The final part of Palihapitiya's tweet takes on the balance sheets of technology companies. With strong growth in AI in recent years, many companies in the sector took on high levels of debt to bank on their future growth. That debt could hurt earnings power and be tough to refinance down the road, given new financials.

Palihapitiya also warns about stock-based compensation for companies. With lower valuations for companies due to the disruption of AI, companies could have to issue more shares or buy back shares to keep the price high and employees happy with their compensation. Both of these items could hurt profitability and a company's financial future.

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