Sometimes the boom goes away. That may also be happening with artificial intelligence. “There is increasing evidence that the hype machine is slowing down.” washington post. Big tech companies like OpenAI, Microsoft, and Google are announcing flashy new products with much fanfare, but so far, AI “has yet to transform the way people work or communicate with each other.” And it turns out that profits are hard to come by. why? One reason for this is that AI technology “remains extremely expensive to build and operate.”
“I believe AI is a bubble that could start to let air out,” said Jeremy Grantham, an investor known for predicting the financial crises of 2000 and 2008. CNN Said. Although tech stocks are set to reach “eye-popping heights” in 2023, and that trend has continued this year, Grantham believes “the time for a sharp market pullback is past.” Other elite investors are also sounding the alarm. business insider ” he said, pointing.dot com crash“This is a lot like 1999,” said Jeffrey Gundlach, CEO of DoubleLine Capital.
AI systems are so advanced that they “nearly match or exceed human performance” in a variety of tasks, he said. nature magazine. But there are also downsides for AI companies. “As performance skyrockets, so do costs.”
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Technology companies are “staking huge sums of money on AI,” John Norton told the Guardian. However, with the exception of companies that “manufacture hardware”, no profits are being made in this area. For this reason, there is a high possibility that “panic” is brewing among investors. But it's unclear what will trigger that process: governments may step in to regulate AI, investors may become wary, or concerns about environmental impact may become too great. “At some stage the bubble bursts and a rapid downward curve begins.”
“Today's market is far from a dot-com bubble market,” said Alan Sloan of Yahoo Finance. A recent survey found that experts are almost evenly divided on whether AI stocks are in a bubble, with 40% saying yes and 45% saying no. If AI stocks are “highly priced” today, tech stocks were “insanely priced” a generation ago. In other words, the decline is not that large. However, there is still a possibility of a decline. “There may be difficult times ahead for investors.”
But that fall may not come soon enough. “The generative AI stock bubble isn’t going to burst anytime soon,” Peter Cohan said in Forbes. The dot-com bubble burst about five years later, but the AI era is less than two years old. “The potential demand for generative AI is in its infancy” and will continue to grow as companies using AI tools see “tangible” benefits. “It may take many years before the current bubble finally bursts.”
What's next?
There are mixed signals. Stability AI, the company behind text-to-image creator Stability Diffusion, has laid off 10% of its employees, according to The Verge. The move comes after a “difficult few months” for the UK-based company, which saw several prominent researchers and its CEO step down. The layoffs “represent the first major AI-based model to reduce workforces since the rise of generative AI.”
Meanwhile, Meta launched its AI-powered assistant across all its apps this week, including Facebook, Instagram, WhatsApp, and Messenger. (The company's stock has since fallen after announcing higher-than-expected AI spending.) The software “will become virtually ubiquitous,” The New York Times said, available in news feeds and search bars. It is said that it will become like this. But making AI inevitable is another thing. now? “The challenge will be convincing people that the new assistant will be useful.”
If you're feeling increasingly skeptical about AI and its profitability, wait a minute. “We tend to underestimate how much new technology will impact our daily lives,” said Bradley Guichard at Seeking Alpha. “Failures and false starts” will occur, and some AI stocks will fall. But AI will likely continue to grow. “Technology is coming.”