Eric Schmidt took over as CEO of Google during the Dot-COM Bubble Burst. He does not expect the same fate as AI.
The former Google executive explained why he didn't think the AI industry was in a bubble while speaking at the Rays Summit in Paris.
AI has expanded rapidly in a few years since ChatGpt took off, Big Tech invested heavily in the industry and sparked a new war of talent. The estimated market value in 2023 is $189 billion, and is projected to grow to a $4.8 trillion industry by 2033.
While some may see signs of a final crash, Schmidt has invested in multiple AI companies, including humanity, pointed out that the hardware and chips market is a specific indication that the market has a lifespan.
“We have these large data centers and Nvidia is very pleased to sell all the chips,” Schmidt said. “I've never seen a situation where hardware capacity is not being captured in software.”
Speaking about his conversation with AI executives, Schmidt said he heard that the AI industry is in a “period of overbuilding” and that “it will “beat overpowered in a few years.”
“They'll say, but I'm fine and the others will lose all the money,” Schmidt said. “That's a classic bubble, right?”
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Then there's the other side of the discussion. Bay Area engineers believe that reinforcement learning chains will change the world. “If you believe that they will become a critical aspect of humanity, it has not been postponed and we need more,” he said.
Schmidt sided with neither side – overpower or underexpansion – but he squeezed over whether it was an industry facing bubble-level corrections.
“Based on my experience, I don't think this is likely to be a bubble,” Schmidt said. “There's a much more chance you're looking at a whole new industrial structure.”
Not everyone agrees. On Wall Street, the story of potential bubbles continues to boil down.
On Wednesday, Tortenselock, chief economist at Apollo Global Management, said the stock market is facing an even bigger bubble than the dot-com boom. The main perpetrator in his view: ai.
“The difference between the IT bubble of the 1990s and the AI bubble today is that the top 10 S&P 500 companies today are overrated than in the 1990s,” writes Sløk.
