Jeff Bezos sends blunt message on AI bubble

Wall Street veterans remember the dot-com bubble like it was yesterday.

The good times seemed like they would never end as markets experienced the longest period of economic expansion in U.S. history between the end of World War II and the year 2000.

"From October 1998 onwards, markets cheered the seemingly endless IPOs of dot-com firms without paying much attention to the viability of their business models," Goldman Sachs says of the era. "A financial bubble was inflating."

There were danger signs.

In 1990, the value of stocks traded on the Nasdaq was 11% of the value of stocks traded on the New York Stock Exchange. By December 1999, that percentage had ballooned to 80%.

The Nasdaq rose 86% in 1999 alone, peaking on March 10, 2000.

And that's when the bubble burst.

"As the value of tech stocks plummeted, cash-strapped internet startups became worthless in months and collapsed," according to GS.

By October 4, 2002, the Nasdaq had fallen 77% from its peak.

So when Jeff Bezos, one of the world's wealthiest people, mentions the "B" word, markets tend to listen.

Amazon founder Jeff Bezos is heavily invested in artificial intelligence.

Earlier this year, Bezos' family office, Bezos Expeditions, invested $72 million in Amsterdam-based AI company Toloka.

And last year, Bezos was one of the prominent investors in a $400 million funding round for Physical Intelligence, a robot startup that also counts OpenAI as an investor.

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Despite his ties to the industry, Bezos isn't blind to the runaway valuations that have become commonplace.

“When people get very excited, as they are today about artificial intelligence for example ... every experiment gets funded, every company gets funded, the good ideas and the bad ideas,” Bezos said on Friday at Italian Tech Week in Turin, Italy.

“Investors have a hard time in the middle of this excitement distinguishing between the good ideas and the bad ideas.”

Despite the tepid estimation of the market's current state, Bezos is still bullish on the AI sector.

Related: OpenAI faces another scathing lawsuit

Bezos sees what's happening now as an "industrial bubble" more similar to the biotech bubble in the '90s. While many investors lost a lot of money to that bubble, "we did get a couple of lifesaving drugs," he said.

So even if many AI firms with billion-dollar valuations fall by the wayside, in Bezos' mind, the technological advancements will be well worth it, even if some investors are wiped out by the bubble bursting.