"Bubble" misses AI's capacity for change, investors say

AI is far too transformative for society — and disruptive to legacy industries — to fixate on a near-term bubble, some of the world's top private investors said at Axios BFD on Tuesday.

The big picture: Financial markets may be nervous now. But the people who invest billions for the long term believe in what they're seeing.

• "I was in Silicon Valley in '98, '99. I saw what happened with the dotcom era. I saw what happened with mobile, saw what happened with cloud computing. This surpasses all of them and more," said Sequoia Capital partner Roelof Botha, one of the world's top venture capitalists.
• "You have so many industries that are relatively ossified and ripe for disruption," Botha said. "And AI isn't just a new distribution mechanism or a new interface. It is fundamentally a set of capabilities that can upend industries."

Case in point: Creatives fear the impact AI could have on entertainment and the arts, but those who are using it right now to change businesses say rejecting it isn't the answer.

• "The reality is, the world's not going to stop and AI is coming, so you have a choice, you could put your head in the sand or you can embrace it," said Gerry Cardinale, managing partner of RedBird Capital Partners, which helped finance the Skydance acquisition of Paramount.
• "I don't think AI is going to replace Robert Plant and Jimmy Page. I just don't think that's happening. And, and similarly it's not gonna replace Ben Affleck and Matt Damon. However, it has to be harnessed."

Reality check: Even those deepest in AI and the world of large language models (LLM) concede that there could be some froth, as Google CEO Sundar Pichai did when he told the BBC Tuesday there was some "irrationality" in the market.

• "I think we're in an LLM bubble, and I think the LLM bubble might be bursting next year," said Hugging Face CEO Clem Delangue, whose company helps people build models for AI.
• But even so, Delangue said, LLMs are "just a subset of AI" when it comes to broader applications across science, technology and media.

The bottom line: "'The bubble' is a pejorative term," Sequoia's Botha said.

• In the long run, he said, it's the fundamental change to the way so many industries operate that matters.