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