Former Google CEO Eric Schmidt explains why the AI wave is no bubble

Eric Schmidt, the former CEO of Google, firmly rejects the notion that the current surge in the AI sector resembles a bubble akin to the dot-com era. He believes that we are witnessing the dawn of a transformative industrial phase driven by advancements in artificial intelligence. Since the introduction of ChatGPT in late 2022, there has been a significant influx of investment in AI technologies. Major technology firms have embraced this innovation, positioning it as the next frontier of growth. However, some skeptics, including Apollo Global Management's Chief Economist Torsten Slok, have cautioned that today's leading AI stocks may be even more inflated than those during the late 1990s tech boom. Additionally, Joe Tsai, Chairman of Alibaba Group, has echoed concerns about a potential bubble in US AI stocks. Despite the growing skepticism surrounding AI, Schmidt, who has invested in prominent AI companies like Anthropic and Perplexity, points to the proliferation of large data centers equipped with Nvidia's chips as evidence that the industry is not in a bubble. Speaking at the RAISE summit in Paris, he noted, "Many industry executives believe we are currently overbuilding and anticipate overcapacity in the next few years, yet they remain confident in their own ventures while suggesting competitors will suffer losses. This scenario resembles a traditional bubble." He elaborated on the situation, saying, "I've analyzed this closely, and with these massive data centers, Nvidia is eager to supply the necessary chips. Real estate developers are accustomed to financing these projects. Historically, I've never encountered a scenario where hardware capacity remained unutilized by software." Schmidt concluded that, based on his extensive experience, it is improbable that the AI sector is experiencing a bubble. Instead, he posits that we are observing the formation of an entirely new industrial framework.