Former Google CEO Eric Schmidt says AI is not a bubble, but a whole new industrial structure

India Today

7 days ago

Eric Schmidt, former CEO and chairman of Google, knows a thing or two about bubbles. After all, he was leading Google when the company was navigating the chaotic aftermath of the dot-com bubble burst in the early 2000s. At that time the internet was seen as a revolutionary technology, which quickly saw billions of dollars of investment. However, everything fell apart with a few years as investors did not get the expected profits. Now, many analysts are predicting that the hype around AI may meet a similar fate. But Schmidt does not believe history is repeating itself.advertisementSpeaking at the RAISE Summit in Paris, Schmidt dismissed growing concerns that the AI boom is headed for a comparable crash. 'I think it's unlikely, based on my experience, that this is a bubble,' Schmidt said. 'It's much more likely that you're seeing a whole new industrial structure' (via Business Insider).Schmidt's comments come at a time when AI is the hot topic and investors are once again all in, eager to stake their money on this new revolutionary technology. Since the debut of ChatGPT in late 2022, major tech firms have funnelled billions into AI development, talent acquisition, and infrastructure. Companies like OpenAI, Google, and Meta are at the forefront, racing to secure top AI talent and build the infrastructure necessary to reach superintelligence first. According to reports, the global AI market, estimated at $189 billion in 2023, is projected to swell to a staggering $4.8 trillion by 2033.
While there is plenty of curiosity and hope, many are questioning whether AI is being overhyped, and whether it might face the same fate as the dot-com era, potentially triggering a market crash. At that time, the internet was seen as a revolutionary technology, prompting investors to pour money into internet companies in anticipation of massive future profits. However, by 2000–2001, with few profits in sight, the bubble burst and it wiped out trillions in value.Apollo Global Management's chief economist, Torsten Slok, recently warned that the current AI surge may represent an even larger bubble than the dot-com era. 'The top 10 companies in the S&P 500 today are more overvalued than they were in the 1990s,' Slok wrote in a note published on Wednesday.In contrast, Schmidt points to the hardware demands of AI as a sign of its long-term viability. 'You have these massive data centres, and Nvidia is quite happy to sell them all the chips,' he said in Paris. 'I've never seen a situation where hardware capacity was not taken up by software.'No overcapacity, limited by electricitySchmidt acknowledges that many are concerned about 'overbuilding' and the risk of 'overcapacity in two or three years.' However, he sees this more as a normal cycle of ups and downs, rather than evidence of an impending collapse. 'That's a classic bubble, right?' Schmidt quipped, referring to those who believe their own firms will survive while others fail. 'If you believe that those are going to be the defining aspects of humanity, then it's under-hyped and we need even more,' he added.advertisementMeanwhile, Schmidt has also addressed the challenges of AI and what he believes could be the biggest obstacle to building superintelligence. In a recent episode of the Moonshots podcast with Peter Diamandis and Dave Blundin, Schmidt identified electricity — not chips or money — as the true limiting factor for AI's progress. 'AI's natural limit is electricity, not chips,' he said, warning that the US may need an additional 92 gigawatts of power to support future AI infrastructure.In a LinkedIn post, he wrote: 'It is reasonable to predict that we are going to have specialised AI savants in every field within five years. Now imagine their capabilities and how they will change society and our day-to-day lives.'- Ends