AI is ‘probably’ a bubble, there will be a correction

Bret Taylor, co-founder of AI startup Sierra, said Thursday that AI is “probably” a bubble that has caused both “smart money” and “dumb money” to fund competitors at every layer of the tech stack.

Taylor, who also serves as chairman of OpenAI’s board of directors, said the free market will ultimately determine where the value is and which AI players will have the best products. He described himself as an AI optimist.

“When everyone knows that AI is going to have a huge impact on the economy across a wide range of industries and workflows, money is abundant,” Taylor told CNBC at the World Economic Forum in Davos, Switzerland.

“I think you’ll see a correction in the next few years, you’ll also see consolidation, but I don’t think you can get innovation without that kind of complex competition,” he added.

Taylor co-founded Sierra in 2023, and the company creates and implements AI agents for customer service. Sierra raised $350 million in new capital in September, pushing its valuation to $10 billion.

Before founding Sierra, Taylor was co-CEO of Salesforce alongside Marc Benioff. He also served as chairman of the board of Twitter, now X, and chief technology officer of Facebook. Metaand created together Google Maps.

He said AI will have a “huge impact” on commerce, search and payments, but it will take time for companies to adapt, the regulatory environment to evolve and the infrastructure to be built.

“I think we’re at the beginning of this curve,” Taylor said.

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