AI Valuations

While PitchBook documents a triumphant 22.3% valuation premium for AI-enabled e-commerce startups in Q4 2025, this headline optimism masks a market already pricing in a correction. A closer examination reveals fundamental concerns: AI startups face structural gross margin challenges due to scaling compute costs, often operating at 25% margins compared to traditional SaaS norms of 70-85%. Furthermore, exit value is dangerously concentrated in rare megadeals like Klarna’s IPO, distorting the reality for most founders. This report analyzes why the current AI premium is likely unsustainable and how investors are already beginning to exercise discipline.