AI has created a 'fake it till you make it' bubble that could end in disaster
A market expert warns of AI hype likened to the dot-com bubble, citing concerns over inflated promises, questionable applications, and energy consumption. Caution advised for investors, with emphasis on traditional strategies.
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A veteran market watcher has raised concerns about the current hype surrounding artificial intelligence (AI), warning that the technology may be "effectively useless." James Ferguson from MacroStrategy Partnership believes that the AI market has created a bubble similar to the dot-com era, with exaggerated promises and questionable applications. He highlighted the issue of large language models inventing information and the high energy consumption of AI technologies as significant challenges. Ferguson cautioned investors, particularly those heavily involved in AI-related stocks like Nvidia, that the market may be overvalued and reminiscent of the dot-com crash. Despite the risks associated with the AI bubble bursting, Ferguson suggested that there is still value in U.S. small-cap stocks that are not as highly priced. He emphasized the importance of traditional investment strategies and cautioned against blindly following tech hype. Ferguson's insights serve as a reminder of the potential pitfalls in the current AI landscape and the importance of prudent investment decisions.
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3 commentsThe risk then is that genAI implodes and takes down all of the other AI disciplines with it.
Ultimately buyers pay for outcomes, and they are much more important than investors, who pay for the promise of buyers and therefore are susceptible to hype (Sequoia fawning over SBF being a juicy example). Therefore, as a seller, I would be drilling down into how my product solves a problem for the buyer, and not leading with how it gets there (AI). "Contract review in 60 seconds means you save $300 an hour on legal fees, and we have a $100M indemnity clause if we get it wrong" rather than "our AI model blah blah".
Even if chat bots have no significant advances in the foreseeable future, "AI" as in large neural networks have already proven themselves to be extremely useful and able to accomplish a lot of things which are almost impossible to do without them.
This quote is enough to dismiss the whole article.
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