Microsoft co-founder Bill Gates has made a sceptical forecast about the current AI upswing, comparing the current buzz and intense investment to the dot-com bubble of the late 1990s. Noting AI’s transformative potential, Gates believes many AI-sector investments are doomed to be dead ends. Bill Gates, who recently spoke on CNBC’s “Squawk Box,” stated that the AI boom is different from the infamous 17th-century “tulip mania” as it is not speculative. It does, however, exhibit specific characteristics of the dot-com bust.
According to Gates, in the late 1990s, there were a plethora of startups making waves on the internet and acquiring significant funds. When the dot-com bubble burst at the turn of the century, several of these failed businesses failed. “Many of them succeeded, but many others were following, and they were following companies expending money,” Gates remembers. “They bet, and that will be the most extensive investment record.
On the one hand, Gates noted that the AI industry is “unbelievably promising and unbelievably perilous at the same time.” He underscored the frenzy for imagination—spending on data centres and industry-led research. isgAI, Microsoft, Meta*, and Elon Musk’s xAI have invested billions.
OpenAI is reported to have entered into a $500bn Data Centre deal with Nvidia and Oracle, among other parties, and Microsoft is increasing its data centre infrastructure worldwide by twofold within the next two years. On the other hand, Bill Gates stated that “it’s not hype in the sense — the value is extremely high, just like creating the internet ended up being, in net, very valuable.”; however, it is “hypersensitive.”, with companies taking economically unsustainable commitments such as building data centres in places where electricity remains the most expensive in terms of fees.
The billionaire also confessed to initially disbelieving in Microsoft’s $1bn early investment in OpenAI, confessing this year that “when the idea came up of investing $1 billion, even I thought that perhaps, perhaps this is a little out there to be investing this much.”; however, Microsoft’s stake is now around $135bn, after a one-time OpenAI turned to a for-profit entity. Gates is not alone in his scepticism; “many of the world’s most prominent AI leaders echo his caution,” Singularity Hub writes. OpenAI CEO Sam Altman said, “investors seem overexcited about AI,” and Meta’s Zuckerberg acknowledged the possibility of an AI bubble. Gates’s remarks are a reminder that “while AI will undoubtedly revolutionize multiple industries, a landscape with many risk-added businesses—not unlike the dot-com boom that brought us many groundbreaking winners and many failures—is likely to be the future”. In conclusion, Bill Gates views today’s AI boom as an unprecedented technological shift in the same vein as the internet revolution. Still, he is wary that the current surge in investment and enthusiasm resembles a bubble, as not all AI projects will be successful despite the high parallel possibilities.