AI: the Bubble, the Buildout and the Hype
Last week, Amazon founder Jeff Bezos and Goldman Sachs CEO David Solomon shared the following comments at Italian Tech Week.
Jeff Bezos: "This is a kind of industrial bubble … people get very excited like they are today about artificial intelligence... The good ideas and the bad ideas [get funded]. 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 …But that doesn't mean anything that is happening isn't real.“AI is real, and it is going to change every industry …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... This is real, the benefits to society from AI are going to be gigantic."
David Solomon: "I'm not going to use the word bubble, because I don't know, I don't know what the path will be, but I do know people are out on the risk curve because they're excited. And 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."I think that there will be a lot of capital that's deployed that will turn out to not deliver returns... I wouldn't be surprised if in the next 12 to 24 months, we see a drawdown with respect to equity markets.""Government spending and 'all of the AI infrastructure build' means — on balance — the economy was 'still in pretty good shape,' despite the impact of tariffs and a softer US job market."Generally speaking, I think what's super exciting is the technology is expanding, new companies are being formed, and the potential of this technology deployed into the enterprise can be very, very powerful."
OUR TAKE
The indiscriminate AI funding phase is ending. A market pullback in the next 12-24 months will separate leaders from losers.AI infrastructure spending (i.e. data centers, chips, energy) will sustain economic activity even as equity valuations correct - as the physical buildout decouples from software returns.AI’s transformative potential is real, but timelines diverge: financial returns face near-term pressure, while technological impact unfolds over years.