Family offices prefer to bet on AI boom with stocks versus startups and VC funds

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.

Investment firms of the ultra-wealthy, such as the family office of Jeff Bezos, are making headlines with massive fundraises for artificial intelligence startups.

Late last month, Bezos Expeditions co-led a $405 million round for robotics startup Field AI with backers including Laurene Powell Jobs’ Emerson Collective. In the past six months alone, Hillspire, the family office of Google billionaire Eric Schmidt, has backed at least six AI startups, per data provided exclusively to CNBC by Fintrx, a private wealth intelligence platform.

But while tech unicorns get most of the buzz, family offices prefer to invest in the AI boom via public equities, according to a recent poll by Goldman Sachs. The bank’s survey of 245 worldwide family offices found that 52% are exposed to AI through primary public equities or ETFs, while only a quarter reported investing directly in AI startups.

Goldman Sachs’ Meena Flynn told Inside Wealth that family offices likely have even greater exposure through stocks than they realize.

“The top nine out of 10 stocks in the S&P are AI-driven stories, and they make up 40% of the S&P,” said the co-head of global private wealth management.

Flynn partially attributed the preference for AI stocks to more tempered valuations in public markets.

“If you look over the last five years, and you look at the valuation discrepancies between private markets and public markets, the private markets really needed to grow into the valuations that some of the [general partners] entered into,” she said. “People, I think, have more confidence in the public markets from a valuation perspective.”