The world is buzzing with talk of an AI bubble. But what is a bubble anyway? To me, this is the zenith of the hype cycle for an idea or property, when we suspend reality and individual genius dissolves into collective madness. Recognizing a bubble is never easy. Charles Mackay, author of ‘Extraordinary Popular Delusions and the Madness of Crowds’ – the definitive guide to the bubble – failed to identify the bubble of his own lifetime: the railways. And the thing is, even if you know you’re in a bubble, you can’t predict when it might burst.
The biggest bubble in the world of tech and finance in its more than 30 years was Internet stocks in 1999. I know several people who called it quits, but did so too quickly, and were taken out on a stretcher. Because the world remained illogical longer than it remained solvent. So, are we there yet when it comes to AI? I asked myself this question when I was faced with two news stories, one from the F world and the other from – well, you decide.
The first story was about OpenAI (the company that gave us ChatGPT) raising money, valuing the company at $150 billion. About India’s GDP when I started high school. This, for a company with an unproven business model, leaks cash like a septic tank.
And what does OpenAI spend money on? Purchasing capacity on Microsoft Cloud, which purchases chips from Nvidia, recycling the cash invested by the two lead investors in this round – Microsoft and Nvidia! And out of fear of missing out—characteristic of market bubbles, investors shunned OpenAI and gravitated toward its rival Anthropic, which immediately announced its own fundraising.
Equally entertaining was the release of ‘Digital Religion: How AI Can Elevate Spiritual Intelligence and Personal Well-Being’ written by the unique and simple Dr. Deepak Chopra. In an interview on CBS Morning, Chopra compared AI to Aladdin’s lamp. Without any irony, while his American interlocutor looks on in surprise, he suggests you rub it and “a genie comes out and it can solve any problem.”
So, is AI really the equivalent of Aladdin’s lamp, magically transforming my writing into Hemingway-esque honeyed prose, perhaps even solving disease and death? To be fair to the good Dr. Chopra, any sufficiently advanced technology is indistinguishable from magic, as futurist Arthur C. Clarke once said. And as with most disruptive technologies, the Internet being a prime example, we overestimate its impact in the short term but underestimate it in the long term. Maybe the same will happen with AI?
The best investment minds I know in the Valley have moved away from the hype of ‘big language models’ like ChatGPT and instead focused on how AI transforms the enterprise. In its last earnings announcement, Nvidia CEO Jensen Huang cited the example of software company Amdox reducing its customer service costs by 30% using an AI-powered agent. Others report similar impact on their top line by deploying AI for lead generation and customer value propositions. This doesn’t sound like fancy science fiction, but when you consider that every business could expand its margins this way, the economic and social impacts – displaced workers, for example – could be profound. More specifically, economists at Goldman Sachs estimate that generative AI could boost global GDP by 7% over the next decade.
But there are detractors even within Goldman Sachs. Jim Covello, its head of equity research, counted 40 billboards selling artificial intelligence – such as ‘Writer Enterprise AI’ and ‘Speech AI’ – while driving on US 101 in Silicon Valley. The latest evidence, he thought, of a bubble. Even Alphabet CEO Sundar Pichai clearly acknowledges this when he defends his company’s AI-related investments in the last quarter, saying, “The risk of underinvestment is dramatically greater than the risk of overinvestment.” is more than”.
On a personal level, my experiments with AI have been playful rather than transformative. I had an AI app that generated an attractive image of me – young, muscular, with “kind eyes” – which when shared on social media fooled everyone except me. Apple Intelligence, which is Apple’s AI platform, will be revealed in the coming weeks, and with Apple’s amazing ability to make technology accessible to the masses, it could bring AI to the edge of connected networks and into the palm of our hands .
But in the meantime, if people try to sell you a business or a stock or a book with ‘AI’ in the title, ignore them. Tell them to shut it down, shut it down, shut it down, drop it. Likewise, for those secondary AI algorithms that tell you what to read, listen to or watch next. Would George Harrison have discovered Ravi Shankar’s ragas if robotic recommendation engines had dictated his youthful choices? Yet it was a powerful influence on the Beatles and the breathtaking originality of Sgt. Pepper. Curb human curiosity and the machines will win any plot to undermine humanity.
Disclaimer
The views expressed above are the author’s own.
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