Former TikTok CEO and Candle Media co-CEO Kevin Mayer believes that the excitement surrounding artificial intelligence has hit an all-time high. Speaking at the VivaTech conference in Paris, Mayer discussed the current state of AI valuations, describing them as "astronomical."
Is the AI just all about hype at the moment?
Understanding the Underlying Value of AI
Mayer acknowledges the significant value that AI brings, likening it to past technological innovations such as the metaverse and blockchain. However, he cautions that a "stabilization" in valuations is likely on the horizon.
For Mayer, AI has yet to show other capabilities that are valuable. Right now, he considers the hype cycle "dramatic."
"I think we'll see a peak of that, of the hype within AI, the valuations, and everyone talking about how it's gonna disrupt every single corner of our economic universe and personal lives," he said.
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The Surge of AI Interest Since ChatGPT
Since the introduction of OpenAI's ChatGPT in November 2022, there has been growing concern among regulators and tech leaders about the potential risks of advanced AI systems.
At the same time, the AI sector has attracted substantial attention from investors, leading to soaring valuations for companies like OpenAI, Anthropic, Cohere, and Mistral. These companies have raised billions from venture capitalists and secured investments from tech giants such as Microsoft and Amazon.
High-Profile Endorsements and Comparisons to the Tech Bubble
Prominent figures in the industry have shown strong support for AI and its growing popularity.
JPMorgan Chase CEO Jamie Dimon, for instance, has emphasized that AI is more than just a trend, asserting that it holds greater significance than large language models like those behind ChatGPT. Dimon even drew parallels between the current AI boom and the tech bubble of the early 2000s.
Mayer's Warning: The AI Hype is Overblown
Despite the optimistic outlook from some quarters, Mayer expressed a more cautious perspective in his conversation with CNBC. He described the current enthusiasm as "vastly overhyped already," pointing to the influx of capital and inflated valuations as areas of concern.
"Too many companies are bringing in too much capital at valuations that are way too astronomical. So there will be a stabilization," Mayer predicted.
He believes that while AI's benefits will become evident across various industries, the current hype is unsustainable.
The Future of AI Valuations
As the AI sector continues to evolve, Mayer anticipates a period of adjustment where the true value of AI innovations will be recognized. This stabilization phase will likely temper the current feverish investment climate, leading to more realistic valuations.
While the journey of AI is just beginning, understanding the balance between genuine innovation and market hype will be crucial for investors and industry leaders alike.
Kevin Mayer's insights highlight the importance of discerning the actual value of AI amidst the prevailing hype. As AI continues to develop and integrate into various sectors, a more measured approach to investment and valuation will be essential for sustainable growth.
Elsewhere, Baidu CEO Robin Li says that the smarter version of AI that can surpass human intelligence is expected to come 10 years from now. However, Tesla CEO Elon Musk contradicts this statement by saying that this kind of AI will be available by 2026.
