Orlando Bravo, co-founder of private equity giant Thoma Bravo, issued a stark warning about the artificial intelligence investment frenzy. Speaking at Davos, he said venture capital firms are piling into any AI story, driving valuations to "astronomical" levels. The rush stems from a palpable fear of missing out on early-stage private market deals.

Bravo, whose firm manages about $180 billion in assets, noted the AI boom has already punished listed software companies. He cited key players seeing shares drop roughly 30% year-on-year as free cash flow multiples contract. The concern is that AI will disrupt many software businesses, especially those with technical core offerings that may be rendered obsolete.

Despite the risks, Thoma Bravo remains committed to enterprise software, which represents about 80% of its portfolio. Bravo views AI as "transformational" for the sector. Investors now watch for a correction in private AI valuations and how established software firms adapt their business models to integrate or compete with emerging AI technologies.