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The chance of a market correction in the artificial intelligence sector is “pretty high,” former Meta executive and British politician Nick Clegg warned on Wednesday, as he pushed back on the concept of artificial superintelligence.
Clegg, the former deputy prime minister of the U.K. who later guided policy decisions at U.S. tech giant Meta, said the AI boom has resulted in “unbelievable, crazy valuations.”
“There’s just absolute spasm of almost daily, hourly, deal making,” he told CNBC’s Arjun Kharpal on “Squawk Box Europe.”
“You’ve got to think, wow, this could be headed for a correction,” he added, noting that the likelihood of such an event is “pretty high.”
Bubbles are typically defined by inflated valuations across the private or public market, where the price of a company doesn’t match its fundamentals. According to Clegg, the possibility of a correction hinges on whether large hyperscalers—who are pouring hundreds of billions of dollars into building data centers—can recoup their infrastructure investments and prove their business models are sustainable.
“That’s obviously going to raise some issues,” Clegg said, referencing “the fundamental paradigm on which this whole industry is built, the so-called large language model AI paradigm.”
### Superintelligence versus Utility
This “paradigm” refers to the goal of artificial superintelligence, commonly defined as AI surpassing human intelligence—a concept often perceived as the “holy grail.” Clegg distinguished this from artificial general intelligence (AGI), where AI systems simply have human-level capabilities.
Many high-profile tech leaders and investors support the idea of artificial superintelligence, including SoftBank founder Masayoshi Son and Meta CEO Mark Zuckerberg. Zuckerberg notably created an AI lab earlier this year to pursue this technology.
However, Clegg expressed skepticism:
“I think there are certain limits to that probabilistic AI technology, which means that it won’t perhaps be quite as all singing and all dancing as people suggest. But it doesn’t mean that technology itself is not going to persist, it’s not going to flourish and is not going to have a huge effect.”
Indeed, Clegg’s former employer Meta survived the dot-com bubble and evolved into one of the world’s largest companies. Similarly, Amazon and Google endured market corrections and emerged stronger, illustrating that a bubble bursting does not always spell the end for companies.
### Building Resilience in a Downturn
It’s a common adage in venture capital that the best companies are often built during downturns or tough funding environments. This is usually because investors become more cautious, focusing heavily on sound business metrics when making investment decisions. As a result, business leaders are compelled to operate efficiently, with those capable of doing more with less funding more likely to outlast their competitors.
Clegg’s stance aligns with other investors and tech leaders who acknowledge an emerging bubble but contend that AI is here to stay. The recent surge in investment has created an “industrial bubble,” yet the technology’s potential remains undeniable.
“AI is real, and it is going to change every industry,” Jeff Bezos told a crowd at Italian Tech Week earlier this month.
### Adoption: Hype Versus Reality
While there is significant low-hanging fruit where AI can be applied quickly, society at large will adopt the technology more gradually, according to Clegg.
“There’s a lot of hype. People in Silicon Valley assume that if you invent a technology on Tuesday, everybody’s going to use it on Thursday. It’s not actually how it works at all,” he said.
“It took 20 years for all of us to get onto desktop computing after desktop computing was technologically feasible.”
Clegg emphasized that the pace of adoption varies:
“I think it’s the pace that is the thing to look out for. That will vary sector from sector, country by country, but I think it might be just a little bit slower than some of the technologists themselves are predicting at the moment.”
https://www.cnbc.com/2025/10/16/ex-meta-exec-nick-clegg-chance-of-ai-correction-is-pretty-high.html