Bill Gates Compares Today's 'AI Bubble' to the Dot-Com Era of the 1990s

Bill Gates thinks the world is in an Artificial Intelligence (AI) bubble and believes these are not just speculations.

The Microsoft co-founder shared his thoughts during an interview on CNBC's 'Squawk Box' on Tuesday, saying that the AI era may experience the same fate as the dot-com bubble during the late 1990s.

According to the billionaire philanthropist, the AI bubble may mimic the trend when dot-com was at its peak, when some Internet-based companies became overvalued, causing a major crash during that decade.

'In the end, something very profound happened. The world was very different,' Gates explained during the interview as reported by Business Insider. 'Some companies succeeded, but a lot of the companies were kind of me-too, fell behind, burning capital companies.'

'Absolutely, there are a ton of these investments that will be dead ends,' Gates also predicted.

However, the American businessman claimed that the AI bubble will not end up like the Netherlands' 'tulip mania' during the 1960s, when the value of tulips went high for a few years, then crashed suddenly.

Defining the Dot-Com Bubble

The dot-com bubble took place between 1995 to 2000, when there was a period of over speculation in the value of internet-based companies, resulting in inflated stock prices.

According to the definition from Finbold, 'The dot-com bubble was a stock market bubble fueled by highly speculative investments in internet-based businesses during the bull market from 1995 to 2000. It saw the value of equity markets grow dramatically, with the technology-dominated Nasdaq index rising fivefold during that period.'

But the situation changed during the late 2000s, when investors realised that the business models of most internet-based companies are not viable, causing a bear market that ran for a couple of years and affected the rest of the stock market.

What Makes the AI Bubble and the Dot-Com Bubble Different?

During the dot-com bubble, startup companies chased growth with little revenue and easy access to the company's capital.

But with today's AI trend, the largest technology companies in the world are reinvesting significant cash flow into physical infrastructure since they believe that the AI technology will be instrumental to the long-term competitiveness of their business.

What does Bill Gates Think About AI?

In March 2023, Gates released an op-ed to talk about his opinion on AI technology.

According to the business mogul, AI will bring about all types of major changes in the coming decades.

'The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone,' he wrote in the op-ed. 'It will change the way people work, learn, travel, get health care, and communicate with each other.'

Gates also mentioned that AI will significantly help a lot of sectors, including health and education.

'This new technology can help people everywhere improve their lives. At the same time, the world needs to establish the rules of the road so that any downsides of artificial intelligence are far outweighed by its benefits, and so that everyone can enjoy those benefits no matter where they live or how much money they have,' he added.