Bret Taylor, co-founder of the artificial intelligence startup Sierra, said Thursday that AI “probably” is a bubble that is causing both “smart money” and “dumb money” to fund competitors at every layer of the tech stack.

Taylor, who also serves as the chairman of OpenAI’s board, said the free market will ultimately determine where the value is and which AI players have the best products. He described himself as an AI optimist.

“When everyone knows that AI is going to have a huge impact on the economy across a huge range of industries and workflows, money is plentiful,” Taylor told CNBC at the World Economic Forum in Davos, Switzerland.

“I think over the next few years, you’ll see a correction, you also see consolidation, but I don’t think you can get innovation without that kind of messy competition,” he added.

Taylor co-founded Sierra in 2023, and the company builds and implements AI agents for customer service. Sierra raised $350 million in fresh capital in September, boosting its valuation to $10 billion.

Prior to launching Sierra, Taylor served as co-CEO of Salesforce alongside Marc Benioff. He has also acted as the board chairman of Twitter, which is now X, the chief technology officer at Facebook, which is now Meta, and co-created Google Maps.

He said AI is going to have a “huge impact” across commerce, search and payments, but it takes time for companies to adopt, the regulatory environment to evolve and infrastructure to get built out.

“I think we’re at the beginning of this curve,” Taylor said.

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