Jeff Bezos says AI is in a bubble
AI is not killing jobs
Inside the AI deal rush
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Jeff Bezos says AI is in a bubble
Amazon founder Jeff Bezos said artificial intelligence is caught in an “industrial bubble” — but insists it’s the kind of bubble that will ultimately benefit the world. Speaking at Italian Tech Week in Turin on Friday, Bezos said the frenzy has all the classic signs of a bubble: stock prices and valuations disconnected from fundamentals, investors throwing money at every idea, and an atmosphere where it’s nearly impossible to distinguish between promising ventures and doomed ones. “This is a kind of industrial bubble,” he told the audience. “Investors have a hard time in the middle of this excitement, distinguishing between the good ideas and the bad ideas. And that’s also probably happening today.”
He recalled how Amazon’s own stock collapsed during the dot-com crash, falling from $113 a share to $6 even as its fundamentals were improving. “Employees were nervous, like all of our employees’ parents were calling them and saying, ‘Are you okay?’ But every single business metric was getting better,” Bezos said. “That’s the hallmark of a bubble — the stock prices can be completely disconnected from the fundamentals of the business.” Bezos pointed to small companies with only a handful of employees attracting huge funding, a “very unusual” dynamic he said underscores just how overheated the market has become.
Still, he said the speculative frenzy doesn’t undermine the underlying promise of the technology. “AI is real, and it is going to change every industry,” he said. “The benefits to society from AI are going to be gigantic.” The billionaire also suggested that bubbles can be productive in the long run. He compared the present wave of AI investments to the biotech boom of the 1990s, when a surge of capital led many firms to collapse but also produced life-saving drugs.
“The [bubbles] that are industrial are not nearly as bad,” Bezos said. “It can even be good, because when the dust settles and you see who are the winners. Societies benefit from those inventions.” Bezos is hardly alone in warning that the AI industry looks overheated. OpenAI CEO Sam Altman, and hedge fund founder Ray Dalio all said the market is already in bubble territory, while Goldman Sachs CEO David Solomon used the same conference in Turin to caution that stock valuations driven by AI enthusiasm will eventually face a “reset.” Bezos urged entrepreneurs and investors to focus on enduring principles. Reality is “completely undefeated,” he said….
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AI is not killing jobs
The mass adoption of ChatGPT is yet to have a big disruptive impact on US jobs, contradicting claims by chief executives and tech bosses that artificial intelligence is already upending labor markets. Research from economists at the Yale University Budget Lab and the Brookings Institution think-tank indicates that, since OpenAI launched its popular chatbot in November 2022, generative AI has not had a more dramatic effect on employment than earlier technological breakthroughs. The research finds little evidence that the tools are putting people out of work.
The study follows widespread concern that generative AI will spark job losses — and even the disappearance of certain types of work — amid a US labor market that has recently weakened. “Despite how quickly AI technology has progressed, the labor market over the past three years has been a story of continuity over change,” said Molly Kinder, a senior fellow at Brookings who co-authored the research. “We are not in an economy-wide jobs apocalypse right now, it’s mostly stable. That should be a reassuring message to an anxious public.” Martha Gimbel, the co-author who heads the Yale Budget Lab, said: “The labor market doesn’t feel great, so it feels correct that AI is taking people’s jobs. But we’ve looked at this many, many different ways, and we really cannot find any sign that this is happening.”
While the analysis suggests ChatGPT — one of the most widely used text-based forms of generative AI — is rapidly changing the mix of occupations on offer to tech workers, it is not shifting the composition of jobs throughout the entire US economy at a much swifter pace than the arrival of computers and the internet. “AI has, so far, not defied gravity,” said Kinder. “We are in very early days of companies figuring out how to redesign themselves with this technology.”….
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Inside the AI deal rush
Last year, when money was surging into artificial intelligence startups, even some venture capitalists involved in those deals worried that the high costs of AI and unreliable demand from businesses were setting up many startups for disappointment. Such skepticism, if not dead, is on its last legs. Monthly revenue that is doubling or quadrupling this year at startups such as OpenAI, Anthropic and Cursor-maker Anysphere have shown that businesses and consumers are consistently paying for AI apps, not just dabbling. That’s sent dealmaking, including into companies that are less proven, into overdrive.
In one sign of venture capitalists’ heightened excitement, they are increasingly offering to invest in startups well before they start formally fundraising, a process that usually involves a presentation by founders, financial forecasts and multiple meetings. In some cases, founders have asked their own investors to stop offering to invest unless the startup’s leaders say they plan to fundraise. “We’ve actually had to ask investors not to send term sheets so it is not distracting us,” said Brendan Foody, CEO of Mercor, a startup that helps OpenAI and other AI developers find contractors and employees to help train new models. He added: “It all comes back to making sure every decision is optimizing our probability of building a great company—and not getting distracted when there is so much happening.”
But venture firms aren’t letting up. Some are approaching founders with offers, sometimes just days or weeks after startups close their last funding rounds. Rather than fielding pitches, the venture capital firms are pitching themselves, prepared with 30-page research presentations on a startup’s competitors and its growth potential. And if the startup bites, the VC partners may quickly hash out the decision internally, sometimes pulling the trigger on an investment within a day. These kinds of unsolicited, or preemptive, investments were popular during the 2020 to 2022 pandemic funding boom but faded in the aftermath—until AI dealmaking took off.
Last October, Felicis successfully made an unsolicited offer to invest in Mercor at a $2 billion valuation, at about 100 times the startup’s run rate at the time, Foody confirmed. Four months later, the company had increased its revenue nearly four times to a $75 million run rate, making the price look more reasonable. Senkut CEO of Felicis declined to comment on the deal and revenue….
Enjoy, SBalley Team!