Baidu CEO: 99% of AI companies won’t survive bubble burst

Overview: The surge in popularity of generative AI has led to the emergence of numerous startups making bold claims about the technology’s capabilities. Many observers compare this trend to a classic market bubble, a sentiment echoed by the CEO of Chinese tech giant Baidu. However, as the hype around AI collides with reality, most AI startups may struggle to survive.

According to Baidu CEO Robin Li, only about one percent of AI companies will withstand the burst of the AI bubble. Li believes this will lead to a more sustainable market with more practical applications for the evolving technology.

Generative AI continues to be a prominent topic, driven by companies like OpenAI and Nvidia. Nvidia, a leading producer of AI hardware, could potentially become the world’s most valuable company. Major tech players such as Microsoft, Apple, and Google are also incorporating AI into their future products.

Despite the excitement surrounding AI, many companies make grandiose claims about the potential job displacements and creative possibilities enabled by text prompts.

During a speech at Harvard’s Future of Business Conference, Li cautioned that many of these products may ultimately fail to find a sustainable market, dubbing them as false innovations.

Li drew parallels between the current AI landscape and the dot-com bubble of the early 2000s, which saw the demise of numerous internet companies. However, he believes that the AI market is now more stable and subdued in 2024. While some remain optimistic about AI’s future, others are approaching the technology with caution, recognizing that Nvidia’s rapid growth may not be sustainable.

Consumer interest in AI technology appears to be tepid. Recent sales data suggests that consumers are not specifically buying AI-focused PCs out of a fascination with AI, but rather because these models come equipped with the technology by default.

In the event of a significant market correction, Li anticipates that the surviving one percent of AI companies will offer highly valuable products and services. He also expressed optimism about the improved accuracy of chatbots, noting a reduction in hallucinations over the past 18 months.

Addressing concerns about potential job displacement due to AI, Li acknowledged the possibility of AI replacing human workers. He predicts a shift in employment dynamics over the next 10 to 30 years.