This week, chatter is back about: Generative artificial intelligence hype destined to die.
new report from new york times and wall street journal Note that many AI startups that have taken in large amounts of cash from venture capital firms over the past few years have yet to find a viable business model.
The Journal suggests that investors who think all startups will be like OpenAI (and therefore very successful) are wrong. This refers to startups like Imbue, Character AI, and Magic AI that are barely making any money.
Venture capitalists are betting that some of these startups will usher in a technological revolution greater than the birth of the Internet. They point to the meteoric rise of OpenAI, whose chatbot ChatGPT has become the fastest-growing consumer app in internet history. OpenAI has grown from zero revenue to over $1 billion in revenue in the last year. That's a rapid growth rate even by Silicon Valley's demanding standards.
So far, few other startups with similarly big ambitions have been able to replicate that success.
The Times says the problem for these startups is not just the difference between spending and revenue, but the fact that they have to compete with big tech companies.
It is becoming clear in Silicon Valley that the AI revolution will come at a very high cost. And the tech companies that are betting their future on it are scrambling to figure out how to close the gap between those costs and the future profits they hope to make.
This problem is especially acute for a group of high-profile startups that have raised dozens of funds. billions of dollars For the development of generative AI, the technology behind chatbots such as ChatGPT. Some of them already understand that it will take billions of dollars to compete head-on with giants like Google, Microsoft, and Meta, but even that may not be enough.
we wrote here This moment's hype about AI will certainly fade in time.Development and implementation takes considerable time Generative AI technology It has permeated our daily lives more than some investors think, and that will lead to disillusionment. But that happens with most new technologies (see Metaverse and self-driving cars).And the analysts we spoke to last month I don’t think there is an AI bubble destined to burst like the dot-com era of the 1990s.:
Like all new technologies, AI may be in the “hype” stage. But that doesn't mean all AI companies are overly inflated in value. [D.A. Davidson analyst Gil Luria] Said.
…Even among experts who see an AI bubble forming, many say it won't end as badly as the dot-com bust. Richard Windsor, founder of research firm Radio Free Mobile, said people were “using complex and untested methods to justify very high ratings”. [AI] “Corporate'', just like in the dot-com era.
But, he said, “The internet bubble burst.” [was] It will be worse than the AI bubble bursting.'' Part of the reason is that even in today's “infant form,'' AI generates significantly more revenue than the Internet did in the 1990s and early 2000s. This is because it allows you to The Internet in the 1990s was “very slow,” he said, “and it took a long time to reach its full potential.” However, Windsor said he sees a limit to how far AI can ultimately reach its full potential. Even if the AI bubble bursts, “what the internet becomes is going to be bigger than what AI becomes in its current form,” Windsor said. .
Read the full article on why the AI boom is not a dot-com bubble.