Every Day There Are More People in the Tech Industry Who Believe AI Could Be a Big Bubble. They May Be Right

AI is a bubble. At least, that’s what Robin Li, CEO of Chinese technology giant Baidu, believes. What’s more, Li says the situation looks bad despite his company’s investment in developing its Ernie chatbot and other AI solutions.

From one bubble to another. In an interview at the “Future of Business” event recently organized by Harvard Business Review, Li explained that the current AI phenomenon resembles previous “technological waves.” He specifically mentioned the dot-com bubble of late 1999, stating that the bubble effect is “kind of inevitable.”

“Healthier” rather than exciting. Li pointed out that after the initial enthusiasm wanes, people often become disappointed when they realize the technology doesn’t meet the high expectations that had been set. However, he said that while AI’s initial excitement has faded, we’re now in a “healthier” part of the cycle.

99% of AI companies will disappear. According to Li, the bursting of the bubble will eliminate most companies currently involved in this field. This “cleansing” process will be significant, eradicating many “fake innovations or products that don’t have a market fit for that.”

The remaining 1% will dominate the AI landscape. As a result, only 1% of today’s companies will remain. These select few will “stand out, become huge, and create tremendous value for people.” Li believes the evolution of AI in 2024 has been quieter but healthier compared to last year.

AI doesn’t get it wrong. According to the Baidu CEO, one key improvement over the past 18 months is the enhanced reliability of chatbots, which are now far less likely to provide incorrect information. “When you talk to a chatbot, a frontier model-based chatbot, you can basically trust the answer,” he said.

It’ll take time until AI impacts jobs. Li added that the impact of artificial intelligence on employment will take time. He believes it’ll take between 10 to 30 years before AI replaces human jobs.

Is there an AI bubble? Recent events suggest that the industry may indeed be experiencing an AI bubble. For instance, in July, the Nasdaq-100 companies lost more than $1 trillion in a single day, with major tech companies in the spotlight. The same thing happened in August. The underlying reason was that investors found the advantages of AI unclear, leading them to change their positions.

However, some months later, that downturn appears to have been just a temporary setback. Nvidia has reached record highs, and other major tech companies are also on the rise. If a bubble exists, one thing is certain: It's just getting bigger.

Image | Igor Omialev

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