BI Davos Diary: Tech leaders worry the AI hype is missing the big picture

• The rich and powerful are in Davos, Switzerland, for day three of the World Economic Forum.
• BI is talking to people on topics from AI infrastructure to the economy under Trump.
• This is what we're hearing on the ground.

The World Economic Forum has brought the rich and powerful together to discuss topics ranging from Donald Trump's impact on the economy to AI's impact on their industries.

This is what Business Insider is hearing and seeing on the ground.

Trump is the main character here

It seems a conversation at Davos can't go three minutes without Trump's name coming up. In an interview at Bloomberg House on Tuesday, Google's chief investment officer Ruth Porat said she saw a "tremendous opportunity" to work with Trump 2.0.

"I think the president and his team have been clear that they see technology as an asset for the country," she said. — Hugh Langley

It feels like Europe is missing in action

The need for Europe to step up has been the recurring theme in my conversations with business and government leaders. Geopolitical and economic uncertainty is at the forefront of everyone's mind.

While business leaders are excited about the new US president and Asia boasts some of the world's fastest-growing economies, Europe seems to be missing from the action. Walking along the promenade in Davos, the presence of American, Asian, and Middle Eastern delegations is unmistakable. But where is Europe? And where is the UK?

One CEO I spoke with Tuesday night stressed that Europe's regulatory landscape had to change to make it easier for businesses to operate there. "What Asia is gaining, Europe is losing," he said.

Another executive observed that Europe was a major topic of discussion in Davos, but its presence feels muted. Srini Pallia, the global CEO of Wipro, said that growth and regulatory challenges in Europe are key concerns this year. "I was in a session just before this, where the European president was present, and she was asked how the EU could reduce regulatory barriers that are hindering growth. I think that's one of the big conversations happening here." — Spriha Srivastava

AI infrastructure is getting a boost — but what if it's too big a boost?

If you're still doubting AI's future impacts and benefits, there are now 500 billion reasons to put that to rest.

Anne Hoecker, the global head of Bain & Company's tech practice, told me that Tuesday's announcement of up to $500 billion of private investment in AI infrastructure shows "how much people believe in the promise of AI."

"This is real. We are really going to have great ROI," she said.

One thing to watch is the balance between supply and demand. While the project aims to meet the rising need for infrastructure, it's a balance. As bad as a shortage is, the opposite isn't ideal either.

"You can argue both sides of that. The use cases are picking up. People will start to see ROIs and will use up all the data center capacity as we build it," Hoecker said.

She said that if people didn't see the ROI they were expecting, the question would be, "Do we have excess capacity built up, and then we grow into it just like any technology innovation cycle?"

Waiting for the industry's needs to catch up to the existing supply isn't straightforward. Beyond the cost of having infrastructure you're not using, there's also the risk of the tech being outdated.

"Each generation of chips is going to be more powerful, more energy-efficient. So, if you have too much capacity in an older generation, does that hamper your ability to move to the next generation? How do you use up that old generation's capacity? So ideally you're not building too much in front of demand," Hoecker added. — Dan DeFrancesco

Leaning into the 'experience economy'

One of the big conversations this year is how countries can navigate an evolving global economy. With growing protectionist policies and shifting trade dynamics, how can economies build resilience and drive sustainable growth?

One idea on the table — leaning into the experience economy.

I moderated a panel Wednesday, "Mass Events, Massive Gains," about how major events like Taylor Swift's Eras Tour, the FIFA World Cup, and the Olympics can bring investment, job creation, and long-term urban development.

The panel featured leaders from diverse industries, including H.H. Sheikha Latifa Bint Mohammed bin Rashid Al Maktoum, Chairperson of the Dubai Culture and Arts Authority; Sir Martin Sorrell, Executive Chairman of S4Capital plc; Patrice Louvet, CEO of Ralph Lauren Corporation; and Anna Marks, Global Chair of Deloitte.

The experience economy is more than just entertainment. It has become a major force in economic transformation, boosting industries like retail, sports, hospitality, and tourism.

But while these events generate billions in revenue, hosting them is no small feat. They can require close collaboration between governments, businesses, and local communities — from infrastructure investments to security and sustainability concerns.

Yet, the true power of these events goes beyond economics. At a time when loneliness is on the rise and digital interactions dominate, mass gatherings remind us of the value of in-person connections.

As global economies look for new growth strategies, is the experience economy the key to driving resilient, inclusive, and long-term economic success? I will aim to find out next year at Davos. — Spriha Srivastava

Meta is trying to reassure advertisers about its moderation changes

Mark Zuckerberg's Meta makeover has had some advertisers concerned about how its changes to content moderation would affect what people start to see across Facebook and Instagram.

In a Davos roundtable discussion with BI, Nicola Mendelsohn, the head of Meta's global business group, said the company had been speaking with advertisers in recent days and trying to reassure them that nothing will change. Mendelsohn said advertisers would still be able to stop ads appearing next to political content if they wish.

"What they've shared back actually is the reassurance that all the commitments that we have to brand safety, brand suitability on the platform, none of that changes," she said. — Hugh Langley

We need a new institution to ensure humanlike AI doesn't harm humanity, Google DeepMind's CEO said

Google DeepMind CEO Demis Hassabis had a busy Tuesday here with two nearly back-to-back interviews at Google Haus. If there was one big takeaway, it was Hassabis' contention that we're not thinking enough about the AI bigger picture. "I think there's way too much hype in the short term," he said. "Actually it's underrated still, underappreciated, the amount of transformation that's going to happen in the medium to long term, so the five to 10 years."

In response to a question from BI, Hassabis said he believed there were big questions around capitalism and society that need to be pondered. "One of the big things economists should be thinking about is what does that do to money, the capitalist system, even the notion of companies. I think all of that changes."

Hassbis said we need an institution that can "meet the moment" — a governing body that can ensure artificial general intelligence, or AGI, is managed in a way that benefits humankind.

"That would be where you put a wise council, an international council of very diverse and smart people from different backgrounds. Not just technologists. I'm talking about philosophers, social scientists, writers, et cetera. But who is building that institute, is what I would ask. And I think we really need that."

He also discussed his work with AlphaFold on protein folding, which recently earned him a Nobel Prize. And who better to discuss the science than Bill Nye, "the science guy," who took the mic for the second interview. — Hugh Langley

Consulting firms are ready for a big year

Consulting firms are ready for what is expected to be a big year for their business thanks to a flurry of potential changes on the horizon.

"There are several macro factors that have been in play for a while: AI certainly, but also strong economic indicators in the US, as well as the current pro-growth sentiment in the market as a result of the incoming administration. So, there might be an uptick in business activity," Sharon Marcil, BCG's North America chair and a managing director and senior partner, told me.

A massive ramp-up comes with issues, though, as was evident in 2021 when the surge in M&A activity led to employee burnout across financial services.

A complete repeat of 2021's record year seems unlikely, but there are still staffing considerations. It's a tricky balance. You need enough workers so resources aren't stretched too thin while avoiding a surplus where there is not enough work to go around.

An immediate fix also isn't easy, as bringing on new talent requires a necessary training period. And good luck telling clients to hold off on deals, especially after so many have been sitting on the sidelines waiting for the market to open up.

"For us, periods of increased activity force us to predict staffing. And that can sometimes be hard. There is a sweet spot between being understaffed and overstaffed. If we find we haven't gone far enough, we try other approaches like off-cycle hiring. It's definitely a balancing act," Marcil said. — Dan DeFrancesco

Proper snow boots are the way to go here

We're three days in, and we've yet to touch one of the most interesting debates I've found at Davos: footwear. Being that we're in the mountains, the abundance of snow and ice means opting for typical business shoes or heels isn't necessarily your best bet.

Boots of varying degrees of heftiness and fashionability are a popular choice. (They don't call it "suits and boots" for nothing.) Others wear spikes that can be taken on and off.

Personally, I've gone all in, opting for proper snow boots. Wearing them with my suit every day is a bit … jarring. However, my daughter thinks I look like Kristoff from "Frozen," so that's a win.

Of course, some people throw caution to the wind and still opt for their dress shoes. Davos is a lot about status, and the luxury of wearing normal shoes since you're being chauffeured around speaks to that. — Dan DeFrancesco