(Bloomberg) - It’s hard not to see “some frothiness in different sectors,” Citigroup Inc. Chief Financial Officer Mark Mason said on the bank’s third-quarter earnings call in response to a question from a reporter about artificial intelligence.
“I feel good about our business and our ability to cover clients,” he went on. “But it’s hard to look at how equity valuations and multiples sit today and not think there are some sectors that are likely frothy and overvalued. But we’ll see how those play out over time.”
Worries about a bubble in AI have grown along with the pace of investment. The five biggest tech companies will spend an estimated $371 billion this year on the data centers needed to train and run complex models. By the end of the decade, that infrastructure will require $5.2 trillion to keep up with demand, McKinsey & Co has said.
Mason’s comments are measured compared to some of the bigger AI skeptics. Greenlight Capital founder David Einhorn recently called the valuations “so extreme that it’s really, really hard to understand them.” Praetorian Capital Management LLC founder Harris Kupperman has called it a bubble, saying payback is “highly unlikely.”
Regardless, AI is part of Citigroup’s future. The bank recently hired a new head of AI, Shobhit Varshney, and has said its generative AI tools have saved 100,000 developer hours per week with automated code reviews. It would take 2,500 developers to do the same in a normal 40-hour work week, the bank said.
By Jenny Surane
