Many investors and financial experts are terrified that an upcoming AI bubble would devastate the economy — but Amazon founder Jeff Bezos can’t wait for it to bust.
Last week at a tech conference in Italy, Bezos acknowledged that the AI sector is experiencing a “sort of industrial bubble.”
Bezos claimed that in addition to the valuations of businesses being disengaged from their core competencies, “people get very excited like they are today about artificial intelligence.”
However, a collapse of the AI sector might ultimately be a good thing for the fourth richest person in the world, since he believes it could remove the weak from the market.
The industrial bubbles are not nearly as harmful; in fact, they may even be beneficial, he claimed, because societies gain from such inventions when the dust settles and the winners are revealed. That is also what will occur here.
According to the billionaire, this is real and AI will have enormous positive effects on society.
Bezos’ remarks emphasize the persistent belief among investors and industry executives that technology would ultimately “usher in an era of abundance” characterized by increased productivity, lower prices for commodities, and healthier lifestyles for people. This type of confidence has been crucial in a sector that has invested enormous sums of money in a technology that is yet to demonstrate itself.
But, as it becomes evident that AI isn’t yet prepared to replace workers, experts have grown more dubious of the industry’s claims. Ninety-five percent of generative AI pilots at businesses are failing to generate significant revenue growth, according to a landmark MIT research released earlier this year.
Bezos is hardly the only one who believes that an AI bubble may eventually be a good thing.
OpenAI CEO Sam Altman’s statement to a small group of reporters in August that “smart people get overexcited about a kernel of truth when bubbles happen.” Is the current state of AI overexciting investors in general? I’d say yes.
When Altman made the claim that “someone” would lose a “phenomenal amount of money” at the time, it seemed to be suggesting that OpenAI may get by very well.
In a similar echo of Bezos’ most recent remarks, he said, “My personal belief, although I may turn out to be wrong, is that on the whole, this will be a huge net win for the economy.”
More recently, Altman reaffirmed earlier this month, when touring one of his company’s data centers under construction in Abilene, Texas, that individuals will overinvest and lose money and underinvest and lose a lot of income.
We will make some foolish capital allocations,” he said, but we are certain that this technology will propel a fresh wave of unheard-of economic expansion over the arc we must plan over.
The optimism of Bezos and Altman draws attention to a widening gap between their extravagant promises and real expectations.
David Solomon, the CEO of Goldman Sachs, stated at the same tech conference in Italy last week that when [investors] are enthused, they tend to focus on the positive things that may go right and minimize the things you should be wary about that could go wrong. He believes that a significant amount of capital will be spent that ultimately fails to generate returns.
“There will be a drawdown, a reset, and a check at some point,” he continued. How long this [bull run] lasts will determine how much of that occurs.
