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Rep. Alexandria Ocasio-Cortez (D-NY) has raised concerns about a potential AI bubble and its economic repercussions, suggesting that there should be no government bailout for AI companies.
Ocasio-Cortez voiced her apprehensions about the AI bubble at a House hearing on AI chatbots on Tuesday. She highlighted the disproportionate influence of AI companies like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), Amazon.com Inc (NASDAQ:AMZN), and Meta Platforms Inc (NASDAQ:FB) on the stock market and the economy.
She also challenged President Donald Trump‘s claim on the economic and Wall Street boom, suggesting that the markets were gaining only due to the AI sector, which is risky.
“We’re talking about a massive economic bubble,” Ocasio-Cortez said. “Depending on the exposure of that bubble, we could see 2008-style threats to economic stability.”
The Congresswoman also highlighted the potential dangers of an AI bubble bursting in the future, stating that there should not be any federal bailout for AI companies.
AOC argued, "we should not entertain a bailout of these corporations," framing it against what she described as healthcare and SNAP benefits being "denied" to Americans.
She attributed the development of exploitative AI chatbots to the pressure on companies to generate profits, expressing concerns about the impact on people’s mental health.
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AOC’s concern over the federal bailout comes after talks around Open AI collapse started intensifying. However, CEO Sam Altman denied claims that the company is seeking a federal bailout or government guarantees, clarifying that OpenAI neither has nor wants taxpayer-backed protection.
His remarks followed confusion sparked by CFO Sarah Friar, who suggested the company might consider a government "backstop" as part of financing options for AI chip needs. Altman also emphasized that governments shouldn't shield private firms from market failure.
The concerns raised by the New York Democrat are also not isolated. Renowned investor Howard Marks recently drew parallels between the current AI market excitement and the 1999 dot-com bubble. While he stopped short of calling it a full-blown bubble, he described the situation as “lofty but not nutty” and not yet a “mania.”
On the other hand, Nvidia Corp (NASDAQ:NVDA) CEO Jensen Huang argued against the notion of an AI bubble, asserting that today’s massive investments are rooted in a historic shift in computing. This perspective is supported by Nvidia’s record-breaking Q3 revenue, which saw a 62% year-over-year increase.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
