Investors are starting to voice concerns about a potential artificial intelligence bubble burst in the stock market. Puck's Ian Krietzberg joins CBS News with more details.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

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Tech industry leaders, including the CEO of Google, have joined a growing number of voices warning about the risks of overinvestment in artificial intelligence. Despite significant demand for AI technologies, there are increasing doubts about whether the massive capital being funneled into the sector is generating proportional revenue or profit.

A recent survey indicates that a majority of companies now believe AI is being overinvested in, with some experts drawing parallels to past financial bubbles such as the dotcom era. Concerns are mounting that a boom-and-bust cycle, potentially exacerbated by debt, could have broader economic implications if current investment trends continue.

Concerns among investors over potential AI bubble pop

Tech leaders seem to be suggesting that the AI boom might be heading for a bust. The CEO of Google is joining what are growing warning calls. He spoke to our partners at BBC News and highlighted the risks of the bubble bursting. Listen. You see real demand and we are constrained in our ability to serve that demand. Given the potential of this technology, the excitement is very rational. No company is going to be immune, including us. If you over invest, you know, we'll have to work through that phase. Ian Kreitzberg is the AI correspondent for Puck and he joins us now. Friend of the show. Good warm welcome back, Ian. Help us understand not just the significance of this warning, but what appears to be an industry wide pullback from AI investment or at least concern that it's not as profitable as it may have appeared to be. Yeah, happy to be back. There's been a lot of concern for a long time because it's not really clear whether all these investments are actually turning into, you know, commensurate revenue or especially profit. And so companies like Google have been very insulated from that consideration because Google and Microsoft and these other hyperscalers have vast businesses preexisting before AI. And so when you read through their earnings reports and filings, they talk about demand, but it's not quite clear whether the massive investments they're making. We're talking about hundreds of billions of dollars of capital expenditures to build data centers, to hire engineers, to do these weird circular financial deals with startups like OpenAI and Anthropic. It's not clear if that's actually driving revenue to the tune of the amount of money that's going into it. And so investors have been a little concerned for a while. But the narrative here is really, really strong. And this idea of are we overinvesting or are we underinvesting, right? There's a lot of investors who think that AI is undervalued. And if you talk about AI as this kind of magical thing that we will be producing some, you know, mystical intelligence, right, which there's no evidence that that's what AI is going to be. The upside is unlimited for a lot of investors. And that's the tricky part of this narrative. And that's why a narrative like that, that is so compelling of, you know, we're creating this this magical intelligence tends to drive such overexcitement, which drives overinvestment, which perpetuates the cycle that just kind of feeds on itself. And, you know, you throw debt into that mix and it keeps feeding on itself. And then you have something that, you know, looks bubblish, we'll say. Yeah. And it's not just Google. I mean, you mentioned overinvestment. The Bank of America Global Fund Manager Survey found that for the first time, a majority of companies do believe that there is an overinvestment in AI. And to your point, people say it's magic. But as you and I both know, it has problems. It hallucinates. There are many issues with the systems. And President Trump, though, was still posting on social media last night, touting investments in AI. So how should our viewers understand this kind of growing chorus of commentary, warning of a potential bursting bubble? What will we see happen next? That's the question of the hour. I think a lot of people are over indexing on whether or not what's happening right now is a bubble. A bubble just refers to, you know, an asset that is whose price has vastly exceeded its fundamental valuation. And to a degree, that matters, right? People are worried like bubbles have been going on forever. People are worried specifically when it comes to comparisons to the dotcom bubble of assets that have vastly exceeded their value. And then if things go up and there's no revenue to support it, things go down. But, you know, it doesn't need to be a bubble for there to be a boom and bust cycle, right? Regardless of how fairly valued the asset is, there's a lot of capital going into this one area. And historically, most boom cycles lead then to bust cycles. And as you add debt into that, the the the impact of the bust cycle in terms of on the wider economy and what that means for potential recession, the severity of the recession, the length of a recession that follows a potential boom cycle that kind of goes up every day. And I think that issue is becoming much more salient to folks that are starting to sound the alarm on, you know, maybe maybe overinvestment is happening. Maybe that's a concern, regardless of if you want to get into the debate of if this is actually overvalued. Right. Well, Ian, our viewers have been warned. We appreciate you joining us from New Jersey. Thanks for your time.

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Concerns among investors over potential AI bubble pop

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