When asked how he made millions on the stock market while in jail, the inmate said, “The market always overbuys and oversells”. True enough. There have been plenty of bubbles, booms, and busts. Some market pundits are already warning of an AI bust.
Just for the record: I am not anti-AI. I have seen it work well and be productive. I just distrust all forms of market hype, particularly on this scale. Remember the sub-primes and dot com booms? They were great, too, according to market spin. Real money tends to disappear very efficiently in this environment, and it doesn’t come back.
Just as Nvidia hit $1 trillion in stock value and dropped immediately afterward, the natural distrust is waking up. The doomsayers are making clear and for a nice change understandable noises.
However unimpressive and predictable the market hype may be, the fact is the market is as usual overbuying. The next inevitable dot to join is taking a hit from price moves. The ceaseless stream of new AI products will soak up a lot of investment capital, too.
What’s annoying is that the market may not have any idea what it’s buying. All AI has actually done so far is generate negative headlines and use them as a sales pitch. With a certain irony, automated buying and index selling will feed this Bonfire of the Inanities for a while, but not forever.
Exactly how AI will fit in to the real world is debatable and isn’t being mentioned by the spruikers.
Some things are obvious enough:
- Your business is not a high school assignment.
- Do you actually need an expensive chatty electronic gossip glued to your business costs?
- Proven performance in specific industrial and IP sectors somehow isn’t a subject for discussion?
- The “AI or die” thing isn’t about anything but the AI hype.
- All business environments are different. An effective AI has to be properly customized to work at all.
- How do you feel about paying big money for fixes for brand-new technology?
- Nobody knows what the legal and regulatory situations will be.
- How good a match for your contracts will AI be?
Talking about transparency, there isn’t any. Like all complex technology, and especially all new technology, there are bugs and problems. With AI, it’s currently all about “hallucinations”. No other issues? That’s odd.
A lot of investment money is on the line here. Talking about large language model problems is no cure for losing a lot of money.
This tech is at the fetal stage. It’s immature. Nobody seems to be defining issues and solving them. It’s like buying an expensive car and then being told the chassis and engine are sold separately.
It’s very arguable that this stage of AI is simply not ready for large-scale distribution. Even if you ignore the hail of examples of obvious clangers, who needs more problems?
For the market, that happy-go-lucky psychosis, losing big money is not a popular pastime. That’s where things can get ugly, fast. If you’re an investment bank, a hedge fund, or a trust, you definitely don’t need that sort of grief.
The market needs to see genuine value. These prices are at the hysterical level. Some of these “riding the wave” ventures definitely won’t survive. They’ll get buried by newer tech.
Six months from now, this AI song and dance routine will be a sour taste in someone’s mouth.
Bitcoin was big, too. This could be a lot worse. Just be careful.
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Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
