Chance of AI market correction is ‘pretty high,’ says ex-Meta exec Nick Clegg as he pushes back on superintelligence

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1 month ago

October 16, 2025

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File: Meta President Global Affairs Nick Clegg speaks during a press conference at the Meta showroom in Brussels on December 07, 2022.

Kenzo Tribouillard | Afp | Getty Images

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 went on to guide 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 for “Squawk Box Europe.”

“You’ve got to think, wow, this could be headed for a correction,” he said, adding 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.

A correction comes down to whether large hyperscalers — “who are pouring hundreds of billions of dollars into the ground and building these data centers” — can recoup their infrastructure investments and prove their business models are sustainable, Clegg said.

“That’s obviously going to raise some issues,” he added, as is “the fundamental paradigm on which this whole industry is built, the so-called large language model AI paradigm.”

Superintelligence versus utility

That “paradigm” is the goal of artificial superintelligence, typically defined as when AI surpasses human intelligence — which is often perceived as the “holy grail,” Clegg said — opposed to artificial general intelligence, where AI systems have human-level capabilities.

Many high-profile tech chiefs and investors have backed the idea of artificial superintelligence, including SoftBank founder Masayoshi Son and Meta CEO Mark Zuckerberg, the latter of which created an AI lab to pursue the technology earlier this year.

“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,” Clegg added. “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 emerged from the dot-com era bubble and is today one of the world’s largest companies. Amazon and Google charted a similar course, showing that a bubble bursting does not always mean the end of a company.

It’s a common adage in venture capital that the best companies are built in a downturn or tough funding environment, often due to investors watching their bottom line more closely and putting greater emphasis on sound business metrics when making investment decisions. This forces business leaders to operate more efficiently, with those who can do more with less funding likely outliving competitors.

Watch the full interview with ex-Meta exec Clegg on crypto, AI, China

Clegg’s stance mirrors that of other investors and tech leaders, who believe a bubble is emerging, but it doesn’t mean that AI isn’t here to stay.

The pile-in has created an “industrial bubble” but “AI is real, and it is going to change every industry,” Jeff Bezos told a crowd at Italian Tech Week earlier this month.

There is low-hanging fruit where AI can be applied quickly, but society at large will adopt the technology more slowly, 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. So, I think it’s the pace that is the thing to look out for. That will vary sector from sector to 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,” he added.

Technology

CNBC Daily Open: A turnaround in sentiment for U.S. markets may be in the cards

Published

4 hours ago

November 24, 2025

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CNBC Daily Open: A turnaround in sentiment for U.S. markets may be in the cards

Traders work on the floor of the New York Stock Exchange (NYSE) on Nov. 21, 2025 in New York City.

Spencer Platt | Getty Images

Last week on Wall Street, two forces dragged stocks lower: a set of high-stakes numbers from Nvidia and the U.S. jobs report that landed with more heat than expected. But the leaves that remained after hot tea scalded investors seemed to augur good tidings.

Even though Nvidia’s third-quarter results easily breezed past Wall Street’s estimates, they couldn’t quell worries about lofty valuations and an unsustainable bubble inflating in the artificial intelligence sector. The “Magnificent Seven” cohort — save Alphabet — had a losing week.

The U.S. Bureau of Labor Statistics added to the pressure. September payrolls rose far more than economists expected, prompting investors to pare back their bets of a December interest rate cut. The timing didn’t help matters, as the report had been delayed and hit just as markets were already on edge.

By Friday’s close, the S&P 500 and Dow Jones Industrial Average lost roughly 2% for the week, while the Nasdaq Composite tumbled 2.7%.

Still, a flicker of hope appeared on the horizon.

On Friday, New York Federal Reserve President John Williams said that he sees “room” for the central bank to lower interest rates, describing current policy as “modestly restrictive.” His comments caused traders to increase their bets on a December cut to around 70%, up from 44.4% a week ago, according to the CME FedWatch tool.

And despite a broad sell-off in AI stocks last week, Alphabet shares bucked the trend. Investors seemed impressed by its new AI model, Gemini 3, and hopeful that its development of custom chips could rival Nvidia’s in the long run.

Meanwhile, Eli Lilly’s ascent into the $1 trillion valuation club served as a reminder that market leadership doesn’t belong to tech alone. In a market defined by narrow concentration, any sign of broadening strength is a welcome change.

Diversification, even within AI’s sprawling ecosystem, might be exactly what this market needs now.

What you need to know today

U.S. stocks rebounded on Friday. Despite that, major indexes ended the week lower. U.S. futures rose Sunday evening stateside. On Monday, Asia-Pacific markets mostly advanced, with Hong Kong’s Hang Seng index jumping as much as 2%.

Qube Holdings receives takeover proposal from Macquarie. The asset management firm has put forth a non-binding proposal to acquire Qube Holdings, an Australian logistics company, at an enterprise value of 11.6 billion Australian dollars ($7.49 billion).

Bessent doesn’t see a U.S. recession in 2026. “We have set the table for a very strong, noninflationary growth economy,” the U.S. Treasury secretary said Sunday in an interview on “Meet the Press.” However, he acknowledged that some sectors have been struggling.

Singapore inflation creeps up. The country’s consumer price index for October rose 1.2% year on year, the highest since August 2024 and surpassing the 0.9% estimate in a Reuters poll of economists. Core inflation also increased a higher-than-expected 1.2%.

[PRO] Opportunities in China’s tech sector. Despite a trade truce between the U.S. and China, ongoing tensions mean both will focus on homegrown technology, analysts say. Here are the Chinese tech firms that Wall Street banks are keeping an eye on.

And finally…

A picture taken on December 8, 2014 in Abidjan shows a Chinese shoe dealer in a transaction at Adjamene’s market.

Sia Kambou | Afp | Getty Images

Chinese consumer brands flood into Africa as old investment model fades

Chinese business dealings in Africa, once dominated by state-owned enterprises, are now increasingly shifting toward consumer products from the private sector.

Chinese investments in Africa’s resource-intensive sectors have declined by roughly 40% since their 2015 peak, according to Rhodium Group China Cross-Border Monitor released on Nov. 18 this year. Meanwhile, China’s exports to Africa have surged by 28% year on year over the first three quarters of 2025, the report said.

— Evelyn Cheng

Technology

CNBC Daily Open: Some hope after last week’s U.S. market rout

Published

10 hours ago

November 24, 2025

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CNBC Daily Open: Some hope after last week's U.S. market rout

Traders work on the floor of the New York Stock Exchange (NYSE) on Nov. 21, 2025 in New York City.

Spencer Platt | Getty Images

By Friday’s close, the S&P 500 and Dow Jones Industrial Average lost roughly 2% for the week, while the Nasdaq Composite tumbled 2.7%.

Still, a flicker of hope appeared on the horizon.

Diversification, even within AI’s sprawling ecosystem, might be exactly what this market needs now.

What you need to know today

And finally…

The Beijing music venue DDC was one of the latest to have to cancel a performance by a Japanese artist on Nov. 20, 2025, in the wake of escalating bilateral tensions.

Screenshot

Japanese concerts in China are getting abruptly canceled as tensions simmer

China’s escalating dispute with Japan reinforces Beijing’s growing economic influence — and penchant for abrupt actions that can create uncertainty for businesses.

Hours before Japanese jazz quintet The Blend was due to perform in Beijing on Thursday, a plainclothesman walked into the DDC music club during a sound check. Then, “the owner of the live house came to me and said: ‘The police has told me tonight is canceled,'” said Christian Petersen-Clausen, a music agent.

— Evelyn Cheng

Correction: This report has been updated to correct the spelling of Eli Lilly.

Technology

Meta halted internal research suggesting social media harm, court filing alleges

Published

10 hours ago

November 24, 2025

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Meta halted internal research suggesting social media harm, court filing alleges

Meta halted internal research that purportedly showed that people who stopped using Facebook became less depressed and anxious, according to a legal filing that was released on Friday.

The social media giant was alleged to have initiated the study, dubbed Project Mercury, in late 2019 as a way to help it “explore the impact that our apps have on polarization, news consumption, well-being, and daily social interactions,” according to the legal brief, filed in the United States District Court for the Northern District of California.

The filing contains newly unredacted information pertaining to Meta.

The newly released legal brief is related to high-profile multidistrict litigation from a variety of plaintiffs, such as school districts, parents and state attorneys general against social media companies like Meta, Google’s YouTube, Snap and TikTok.

The plaintiffs claim that these businesses were aware that their respective platforms caused various mental health-related harms to children and young adults, but failed to take action and instead misled educators and authorities, among several allegations.

“We strongly disagree with these allegations, which rely on cherry-picked quotes and misinformed opinions in an attempt to present a deliberately misleading picture,” Meta spokesperson Andy Stone said in a statement. “The full record will show that for over a decade, we have listened to parents, researched issues that matter most, and made real changes to protect teens—like introducing Teen Accounts with built-in protections and providing parents with controls to manage their teens’ experiences.”

A Google spokesperson said in a statement that “These lawsuits fundamentally misunderstand how YouTube works and the allegations are simply not true.”

“YouTube is a streaming service where people come to watch everything from live sports to podcasts to their favorite creators, primarily on TV screens, not a social network where people go to catch up with friends,” the Google spokesperson said. “We’ve also developed dedicated tools for young people, guided by child safety experts, that give families control.”

Snap and TikTok did not immediately respond to a request for comment.

The 2019 Meta research was based on a random sample of consumers who stopped their Facebook and Instagram usage for a month, the lawsuit said. The lawsuit alleged that Meta was disappointed that the initial tests of the study showed that people who stopped using Facebook “for a week reported lower feelings of depression, anxiety, loneliness, and social comparison.”

Meta allegedly chose not to “sound the alarm,” but instead stopped the research, the lawsuit said.

“The company never publicly disclosed the results of its deactivation study,” according to the suit. “Instead, Meta lied to Congress about what it knew.”

The lawsuit cites an unnamed Meta employee who allegedly said, “If the results are bad and we don’t publish and they leak, is it going to look like tobacco companies doing research and knowing cigs were bad and then keeping that info to themselves?”

Stone, in a series of social media posts, pushed back on the lawsuit’s implication that Meta shuttered the internal research after it allegedly showed a causal relationship between its apps and adverse mental-health effects.

Stone characterized the 2019 study as flawed and said it was the reason that the company expressed disappointment. The study, Stone said, merely found that “people who believed using Facebook was bad for them felt better when they stopped using it.”

“This is a confirmation of other public research (“deactivation studies”) out there that demonstrates the same effect,” Stone said in a separate post. “It makes intuitive sense but it doesn’t show anything about the actual effect of using the platform.”

CNBC’s Lora Kolodny contributed reporting.

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