He has a book on "Universal Artificial Intelligence" , that defines what he considers AI and then solves it. The only catch is that it relies on Kolmogorov complexity, which is incomputable.
The Kolmogorov complexity of a string is (loosely) the size of the smallest possible Turing machine that will output that string when run. So a string with 1000x "a" has a lower complexity than a random string of length 1000.
He sees GAI as a system that, given all its input up to now (from sensors and the like) and some value-function that defines the goal we're trying to reach, takes the action that has the highest expected value of the value-function. It's hard to give a better definition of intelligence in a completely general sense: given all input, choose the most likely best action.
That requires some guessing about the future: given all this input so far, for all possible next inputs in the next time step, what is the likelihood of each.
And his answer is: the likelihood is correlated with the Kolmogorov complexity of the sequence of all inputs so far, plus the possible future input we're currently considering. The idea is that there is information in the inputs so far, and the sequence that best uses that has the lowest Kolmogorov complexity and is most likely to occur. If we've, seen 999 "a" s, we expect another one. If we've seen a car-shaped object slide left to right on previous camera images, we expect it to continue its movement. If the input so far is completely random then every possible future is equally likely. Et cetera.
Given that, it becomes possible to calculate the value function for every combination of possible action and possible next sensor input, and the AI can know what to do.
Except of course for the detail that this is (wildly) incomputable.
But what is somewhat correlated to Kolmogorov complexity? Compressibility.
So that is why Hutter is interested in better compression algorithms.
All this is very loosely stated from memory, I was interested in this stuff over a decade ago...