Jeff Bezos says AI is in an industrial bubble but society will get ‘gigantic’ benefits from the tech

TURIN, Italy — Artificial intelligence is currently in an “industrial bubble” but the technology is “real” and will bring big benefits to society, Amazon Founder Jeff Bezos said on Friday.

The term bubble usually refers to a period of inflated stock prices or valuations of companies that have disconnected from the fundamentals of a business. One of the most famous bubbles that burst was the 2000 dotcom crash where the value of internet companies plummeted.

Exor CEO John Elkann asked Bezos on stage at Italian Tech Week in Turin, Italy whether there were signs that the current AI industry is in bubble.

“This is a kind of industrial bubble,” the Amazon founder said.

Bezos laid out some of the key characteristics of bubbles, noting that when they happen, stock prices are “disconnected from the fundamentals” of a business.

“The second thing that happens is that people get very excited like they are today about artificial intelligence,” Bezos added.

During bubbles, every experiment or idea gets funded, he told the audience.

“The good ideas and the bad ideas. And investors have a hard time in the middle of this excitement, distinguishing between the good ideas and the bad ideas. And that’s also probably happening today,” Bezos said.

“But that doesn’t mean anything that is happening isn’t real. AI is real, and it is going to change every industry.”

Bezos gave the example of a six-person company receiving billions of dollars of funding. This is “very unusual behavior” and yet this kind of activity is happening today, he said without making it clear what company he was referring to.

The billionaire however, said that ultimately industrial bubbles could be positive. He pointed to the biotech and pharmaceutical company bubble in the 1990s, which led to the development of some life-saving drugs even though many companies eventually went bust.

“The [bubbles] that are industrial are not nearly as bad, it can even be good, because when the dust settles and you see who are the winners, societies benefits from those inventions,” Bezos said.

“That is what is going to happen here too. This is real, the benefits to society from AI are going to be gigantic.”

Bezos is not the only major business figure warning about an AI bubble. In August, OpenAI CEO Sam Altman reportedly said the AI market is in a bubble, and many investors have also raised the issue.

Goldman Sachs CEO David Solomon on Friday expressed some concerns about stock market levels amid the AI hype.

“When [investors are] excited, they tend to think about the good things that can go right, and they diminish the things you should be skeptical about that can go wrong … There will be a reset, there will be a check at some point, there will be a drawdown,” Solomon said at Italian Tech Week. “The extent of that will depend on how long this [bull run] goes.”

Karim Moussalem, chief investment officer of equities at Selwood Asset Management, said last week that the “AI trade is beginning to resemble one of the great speculative manias of market history.”