The AI bubble might pop, but a billionaire claims society will benefit
In this DML Report…
Jeff Bezos, speaking at Italian Tech Week in Turin, Italy, on October 3, 2025, described the artificial intelligence sector as existing in an "industrial bubble," where stock prices detach from business fundamentals amid widespread excitement. Responding to a question from Exor CEO John Elkann during a panel, Bezos noted that such bubbles fuel funding for every experiment, encompassing both viable innovations and flawed ones, making it difficult for investors to differentiate amid the hype. He cited the example of a six-person company securing billions in funding as emblematic of this unusual investor behavior currently underway in AI.
Despite the bubble's risks, Bezos affirmed that AI remains a legitimate technology poised to transform every industry, drawing parallels to the 1990s biotech and pharmaceutical boom, where numerous firms collapsed but survivors delivered life-saving drugs. He argued that industrial bubbles can ultimately prove beneficial, as the eventual identification of winners yields inventions that advance society, predicting "gigantic" benefits from AI once the current fervor subsides. This perspective underscores a pattern where post-bubble clarity amplifies long-term gains, much like the dot-com era's fallout in 2000 that reshaped internet infrastructure.
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Echoing these concerns, OpenAI CEO Sam Altman warned in August 2025 that the AI market is in a bubble, while Goldman Sachs CEO David Solomon, also at Italian Tech Week, highlighted how investor enthusiasm downplays potential pitfalls, foreseeing an inevitable market reset and drawdown whose severity hinges on the bull run's duration. Selwood Asset Management's chief investment officer for equities, Karim Moussalem, stated last week that the AI trade mirrors historic speculative manias, prompting his firm to prepare for fallout. These views collectively signal heightened caution in AI valuations amid record investments.