In the high-stakes world of semiconductors and artificial intelligence, few voices carry as much weight as that of Pat Gelsinger, the former chief executive of Intel Corp. who stepped down in December after steering the company through turbulent times. Now a general partner at Playground Global, Gelsinger recently sounded a cautionary note on the AI frenzy gripping the tech industry, likening it to historical bubbles while predicting its endurance for years to come.

During a CNBC interview, Gelsinger didn’t mince words: “Of course we’re in an AI bubble,” he declared, pointing to the massive investments pouring into data centers, chips, and infrastructure without commensurate real-world benefits yet materializing for businesses. This assessment comes amid a spending spree estimated to reach $500 billion globally, driven by hyperscalers like Microsoft, Google, and Amazon, according to reports from various industry analyses.

The Echoes of Past Manias: Drawing Parallels to the Dot-Com Era

Gelsinger drew explicit parallels to the early internet boom of the late 1990s, a period when exuberant investments in nascent technologies led to spectacular growth followed by a painful bust. He warned that today’s AI hype mirrors that era, with vendor financing and speculative bets inflating valuations. “We have seen this before,” Gelsinger noted, emphasizing that while the bubble may not burst imminently, the long-term sustainability hinges on tangible productivity gains.

Yet, unlike doomsayers predicting an immediate collapse, Gelsinger offered a tempered optimism. He suggested the AI surge could persist for “several years”—potentially two to four—before any significant correction, allowing time for innovations to deliver value. This view aligns with his experience at Intel, where he championed ambitious expansions under the CHIPS Act to bolster U.S. chip manufacturing amid global competition from players like Taiwan Semiconductor Manufacturing Co.

Unmet Promises: Businesses Await Material AI Benefits

Critics and insiders alike have echoed Gelsinger’s concerns, highlighting how companies are funneling billions into AI without clear returns on investment. As detailed in a recent article from Business Insider, Gelsinger stressed that “businesses are yet to really start materially benefiting” from these technologies, a sentiment that underscores the gap between hype and practical application in sectors like healthcare and finance.

Moreover, Gelsinger’s commentary extends to broader industry dynamics, including Intel’s own struggles. In a piece by CNBC, he discussed the U.S. government’s stake in Intel and the execution of the CHIPS Act, arguing that subsidies alone won’t suffice without filling fabrication plants— or “fabs”—with cutting-edge production. This critique arrives as Intel faces competitive pressures, having lost ground to Nvidia in the AI chip race.

Strategic Shifts: Vendor Financing and Global Spending Trends

The former CEO also touched on the role of vendor financing in fueling the bubble, where tech giants extend credit to sustain demand for their products. Reports from Moneycontrol highlight Gelsinger’s warning that such practices, while boosting short-term growth, introduce “enormous leverage into the system,” reminiscent of financial mechanisms that amplified the dot-com crash.

Looking ahead, Gelsinger’s prognosis suggests a window for course correction. He anticipates no major shifts in the next few years but foresees a transformation by the decade’s end, where AI could evolve from speculative tool to foundational technology, much like the internet did post-bust. This perspective is particularly resonant for industry insiders navigating investment decisions in a volatile market.

Beyond the Bubble: Lessons for Semiconductor Leadership

Gelsinger’s insights also reflect on his tenure at Intel, detailed in analyses like those from Reuters, which chronicled missed opportunities and failed product deliveries under his watch. Despite these setbacks, his call for caution urges a balanced approach: embrace AI’s potential without blind optimism.

Ultimately, as the AI wave continues to swell, Gelsinger’s voice serves as a sobering reminder for executives and investors. The bubble’s persistence offers breathing room, but the true test will be in translating massive expenditures into enduring economic value, ensuring the industry doesn’t repeat history’s mistakes.