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Microsoft co-founder Bill Gates joins 'Squawk Box' to share his thoughts on the AI technology, whether he's worried we're in an AI bubble, impact of AI on energy and jobs, President Trump's industrial policy, and more. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/42d859g
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Bill Gates argues that while AI represents a genuinely transformative technology comparable to the internet, current investment frenzies will produce significant dead ends and economic waste, requiring governments to adopt predictable industrial policies that don't pick winners or distort competition.
- AI is the most profound technical achievement in Gates' lifetime with extremely high economic value, but the investment bubble will result in many failed companies and stranded capital
- Data center deployment faces local political resistance on electricity costs and job displacement that must be addressed through nuclear power and honest communication, not suppressed
- Government industrial policy must be predictable and treat companies equally rather than favoring those it has stakes in, yet current US policy rules are unclear
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Government operates best when its policies are predictable, meaning tariffs, regulations, and policy frameworks should remain stable over long periods such as 20 years so that companies can make long-term capital investment decisions with confidence.
“The government operates best when it's kind of predictable. That is when you know what you know, what are the tariffs going to be for the next 20 years? Because when you build a a factory, uh so the government shouldn't be changing its policy, you know, every year or every day. Uh because you know, predictability is a very, very important thing.”
The current AI investment situation resembles the internet bubble more than the tulip bubble—meaning something genuinely profound will happen and the world will be fundamentally different, but many of the companies making massive commitments today will fail and burn capital despite the underlying technology being transformative.
“If you mean it's like the internet bubble where in the end something very profound happened. The world was very different. Some companies succeeded, but a lot of the companies were kind of mean to fell behind uh burning capital companies. Absolutely, there are a ton of these investments um that will be dead ends.”
Communities are resisting the placement of AI data centers in their locations because they are concerned about rising electricity costs for residents' homes when data centers are added to local power grids.
“There's a whole bunch of places where people want to put data centers and uh you know, the community says, 'No, we don't want this because of we don't want to have to spend more money for power to power our own homes.'”
Communities are simultaneously worried that if data center expansion is successful, it will result in job losses, creating a double-sided concern about both economic costs and employment impacts.
“At the same time they're worried that if they actually are successful, they'll also lose their jobs.”
AI represents the biggest technical achievement in Gates' lifetime and is so profound that its influence is hard to overstate, with economic value that is extremely high because it provides intelligence capabilities that can deliver medical advice, tutoring, and drug design assistance.
“The AI is the biggest technical thing ever in my lifetime. I mean it is so profound and therefore it's influence is hard to overstate. And the economic value, this is basically intelligence. Uh you know, where you can get medical advice, so you can get a tutor, or you can get somebody to help you design drugs. So, the value is extremely high.”
There is a rush of people attempting to position themselves to receive government money and be at the 'front of the line' for government support, creating moral hazard and misaligned incentives in industrial policy.
“Yes, I think there's a rush of people to say, 'Wow, uh you know, maybe that's how to you know, get to the front of the line for government money.'”
AI will have a significant impact on the job market over the next several years, though the scale of this impact has not yet been seen in large numbers.
“In terms of the jobs, this is going to take some period of time. But yes, uh although it hasn't been seen in large numbers, over the next several years, there will be some impact on the job market.”
Some large tech companies making massive commitments to chip makers and data centers are not yet making money on AI, but justify these investments because 'this math makes sense'—implying they believe future AI revenues will justify current capital expenditures.
“You look at all the investments that are being made today by some of the big tech companies. Some companies were not making money on AI yet, but are making massive commitments to chip makers and data centers and say this math makes sense.”
If a company wants to remain competitive as a tech company, it cannot opt out of the AI race, even if it wishes to avoid the risks and capital commitments involved.
“But you know, if you want to be a tech company, you don't get to say no. Uh you know, let's check out of this race.”
Some companies will become obsolete by purchasing a generation of chips before capturing the value those chips could deliver, because the next generation of chips will arrive and those companies won't have recovered their investment.
“Or they'll buy a generation of chips and and you know, they won't have captured all their value before the next uh one comes along.”
TerraPower nuclear reactors should be placed in locations where it is clear that residents' electricity bills will not increase, solving the political resistance to data center expansion and the energy needs of AI infrastructure.
“We need to put things like TerraPower nuclear reactors in places where it's very clear that you're not raising the the residents' electricity bills because that's being put in there.”
When government supports nascent technology, it must be clear whether it is doing so for the good of the country while treating companies equally, or whether the government intends to own stakes in companies and will favor those companies it owns parts of over competitors with better technology.
“Understanding when the company's helping nascent technology is it um doing that for the good of the country and you know, not and treating companies equally, or will it want to own part of those companies and not and if somebody has better technology, they'll favor the company they own part of. You know, we need to understand what those policies are.”
Bill Gates is suggesting that the climate community should shift its strategy from focusing on temperature and emission targets to focusing on the impact on human lives.
“he's suggesting that the climate community should shift its strategy from temperature and emission targets to the impact on human lives.”
Location selection for new nuclear reactors must prioritize sites where the economics and political acceptance are very strong, because the government does not have permission to drive up residents' electricity costs.
“So, we need to make sure uh to pick locations where the economics and the political acceptance is very, very strong. We have We don't have permission to drive up people's electricity's costs.”
Historically, nuclear power plants were built with a business model where utility companies bore most of the liability and financial risk, but this model will not be repeated in future nuclear development.
“Historically, nuclear was done in a way that the utility bore a lot of that liability. That that business model won't get repeated.”
It is important for people in authority to speak frankly about the fact that AI will have a big effect on the job market, despite some people viewing such honesty as potentially slowing the US in the global AI race.
“But it's only honest for people um to speak frankly about the fact this will have a big effect on the job market.”
Some companies making massive AI infrastructure commitments will regret the spending because they will commit to data centers with electricity costs too expensive to operate profitably, or these costs could be reduced by locating operations overseas.
“Some of them, you know, they'll commit to data centers that whose electricity's is too expensive, you know, that it could be done overseas.”
Some people react negatively to speaking frankly about AI's job market impacts by questioning whether such honesty will slow the US in its AI race competition.
“Nowadays, when you say that, some people are like, 'Oh, how can you you know, you know, say that? Isn't that going to slow the US down in this race?'”
The rules governing current US government industrial policy for chips and rare earth materials are unclear, creating uncertainty for companies trying to make investment decisions.
“But the rules of the game we're playing are pretty unclear right now.”
Creating the internet ultimately proved to be extremely valuable, just like AI is expected to be, supporting the view that AI investments—despite current inefficiencies—are being made in pursuit of a genuinely transformative technology.
“Just like creating the internet ended up being in that very, very valuable.”
Bill Gates is being positioned as discussing climate strategy ahead of COP 30 through a new essay he has published.
“Microsoft's co-founder Bill Gates publishing a new essay on climate. It's aimed at to deliver a message ahead of COP 30”