Peter Thiel Predicted a Year Ago That AI Would Become a Lightning Rod for Fear and Control

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A year ago, legendary Silicon Valley investor Peter Thiel warned that the AI boom could mirror the dot-com era, with enormous hype but concentrated financial gains. Speaking at the Aspen Ideas Festival, Thiel argued that technological importance does not automatically translate into profits, citing the internet bubble of the late 1990s.

“’99 was both the peak of the bubble and also in a sense the peak of clarity. People could realize the new economy was going to replace the old economy, the internet was going to be the most important thing in the 21st century and people were right about that.”

Thiel noted that even companies widely regarded as winners, like Amazon, saw stock declines of nearly 95 percent before delivering long-term returns, illustrating the patience and risk tolerance required to profit from foundational technologies.

He also highlighted the financial concentration in today’s AI market. Roughly 80 to 85 percent of AI-related profits are captured by Nvidia, the company supplying chips that power most large-scale AI systems, raising questions about whether hardware dominance will persist or eventually be overtaken by application-layer companies, as happened with the internet.

“If they all do it then the chips become a commodity and nobody makes money in chips.”

Thiel also warned that AI’s promise of decentralization is under pressure. Initial visions of AI as a libertarian or crypto-anarchist force challenging centralized power are giving way to systems that reinforce existing institutions.

Now, venture capitalist David Friedberg has echoed Thiel’s predictions, observing last week on the All In podcast that AI has become a lightning rod for fear and control.

“Peter Thiel said this best. He’s like, ‘Look at all the money that’s going into AI, there’s really only one company that’s making any money, and that’s Nvidia.’”

“It’s sort of like when the internet was happening, everyone thought these fiber optic switch companies were going to make all the money. Turns out that was wrong. It was the end applications that made all the money.”

Friedberg added that AI is already shaping political and social debates, with concerns over local data centers, wealth concentration, and regulatory influence fueling fear and compliance.

“AI is the new lightning rod for fear and divisiveness that ultimately breeds compliance and control.”

“Peter Thiel said this best. He’s like, ‘Look at all the money that’s going into AI, there’s really only one company that’s making any money, and that’s Nvidia.’”

“Like at this point, the jury’s still out. We don’t even know what AI is.”

“It’s sort of like when the internet was happening, everyone thought these fiber optic switch companies were going to make all the money.”

“Turns out that was wrong. It was the end applications that made all the money.”

“And they competed in many different markets. from Google, to Amazon, to Uber.”

“You can go down the list of all the beneficiaries of the core infrastructure technology of the internet that was built out.”

“So what is really going on?”

Well, AI is the new lightning rod for fear and for divisiveness that ultimately breeds compliance and control.”

“Which is where these politicians are trying to drive the populace and the voting conditions in the United States.”

“And that’s what’s going on right now.”

“There’s a lot of fear about, ‘Putting this data center in my town is gonna do X or Y or Z,’ with no real conversation about the truth of that matter.”

“There’s a lot of fear about wealth creation being aggregated in the hands of a few when as we saw with the internet, it benefited the many.”

“And that fear mongering is a very similar tactic that we’ve seen in the prior generations where policies were misstated, fear was used, and then voting control allowed folks to come to power that were looking for power.”

“So I think it’s just the lightning rod at the moment.”

Bernie Sanders made a case for why we shouldn’t trust billionaires as the sole decisionmakers when it comes to AI just last week.

“Needless to say, there is a whole lot about AI and robotics that needs to be discussed, needs to be analyzed. But one thing is for sure: this process is moving very very quickly, and we need to slow it down. We need all of our people, all of our people involved in determining the future of AI, not just a handful of multibillionaires.”

 

A year after Thiel’s warnings, the landscape he predicted is taking shape: concentrated early profits, uncertain application-layer winners, and growing debates about AI’s societal impact. His foresight into the challenges of timing, profit distribution, and ideological shifts appears increasingly prescient as the technology continues to evolve.