Amazon founder Jeff Bezos says ‘AI bubble’ is real but its impact on society will be ‘gigantic’

“It can even be good, because when the dust settles and you see who are the winners, societies benefit from those investors,” 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.”

What is a tech bubble?

A bubble in tech refers to a period when companies experience sky-high valuations and inflated stock prices, far removed from their actual business performance. The famous dot-com bubble of the 2000s is an example of what happens when such a bubble bursts. However, tech investors point out a key distinction between the current AI bubble and the dot-com bubble: during the dot-com era, the market lacked strong players like Nvidia, whose AI chips are central to AI infrastructure, and OpenAI, the San Francisco-based startup that brings the services to the core with its ChatGPT and other AI tools.

During a bubble, every experiment or idea gets funded, which is a typical trait of a bubble, he told the audience at the conference.

“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.

Big tech’s AI spending – and borrowing

Big Tech is spending billions of dollars on advanced artificial intelligence chips and data centers, driven by the belief that they are all competing in the AI race. In Silicon Valley, there is a strong conviction that as more individuals and corporations adopt AI tools such as ChatGPT and Claude, a robust AI infrastructure will be essential to fundamentally transform key economic activities, shifting many tasks from humans to machines.

As a result, Big Tech is turning to private investors to fund their bold bets. However, the biggest question remains: once the AI infrastructure is in place, how will these companies recoup their investments and pay off the mounting debt, which is accumulating to the tune of trillions of dollars?

But Bezos isn’t the only high-profile tech executive warning about the AI bubble. OpenAI CEO Sam Altman said in August that the AI market is indeed in a bubble. The ChatGPT maker recently announced a $500 billion AI infrastructure project called Stargate, alongside executives at the White House in January.

Since then, many tech giants, including Meta, Google, and Microsoft have ramped up their AI spending, investing billions of dollars in data centers. In fact, OpenAI has plans to invest trillions of dollars into AI infrastructure. Meanwhile, Meta seeks $29 billion vioa private capital for its AI data center buildout. Oracle, another high-profile tech company, recently issued $18 billion in dept to fund its AI and infrasture expansion.

Just last month, OpenAI reached an agreement with Nvidia, the Santa Clara, California-based tech company and one of the biggest beneficiaries of the AI boom, to invest $100 billion in Sam Altman’s data center buildout.

Citigroup forcasts big tech’s spending on AI will cross $2.8 trillion dollar by 2029.