AI is seemingly everywhere right now, and I’ve written a bit about it before. As I’ve started diving more deeply into it, I see all the hype about how AI will be disrupting work. Well, I’ve developed a somewhat contrarian viewpoint to the prevalent viewpoint of “AI taking over everything”. Here are a few random thoughts on the whole thing right now.
A lot of what AI is replacing now, and expected to in the near future, runs on the assumption that it will remain (nearly) free. However, most of the current costs are funded by investor dollars. As MIT recently reported, 95% of AI initiatives are failing to generate value. So, the only way companies are gaining value from AI is via its low cost. And the operating costs are significant. Data centers are expensive, both to build and to operate. GPUs aren’t cheap to buy. The environmental costs are steep. And, right now, those costs are being paid from investor dollars. When those dry up (investors need to make a return on that investment at some point, and that needs to be greater than the investment as well as the current operational costs. I expect the point when investors stop feeling FOMO and start worrying about making a return will be coming soon. I expect that when the costs become the responsibility of the consumer, the price will escalate abruptly and steeply. Will a junior developer really be displaced by ChatGPT or CoPilot? Or will we suddenly find junior developers much more cost-effective?
Adding to this, I’ve seen discussion about how AI infrastructure investment is potentially masking a recession. Thus, I’m concerned that we’re missing the weakening economy, things like continued tech-sector layoffs, and are not paying attention to some big economic weaknesses. If AI investment dries up, and layoffs start compounding, the dominoes start to fall, and that brings a significant recession/depression. Which will muddle this significantly.
Anyway, I think that we are in a bubble regarding AI. Like the Dot Com bubble, I think that AI will herald significant technological changes. AI is a powerful tool, and will continue to be so. However, I am confident that the techno-dystopia predicted by AI hyper-meisters will not materialize. I’m not sure we can even conceptualize what it will look like at the end of this cycle. But I am confident that those who have mastered AI will benefit greatly from the coming revolution. There are opportunities, and now is the time to make the investment in understanding them.
Competition may be increasing and perhaps that might limit the depth of the gouge when it comes. Have you any thoughts on the extent and nature of competition, Carl?
But listening to discussions in Australia, especially a recent episode of the brilliant podcast
‘If you’re listening’
(available at our ABC https://www.abc.net.au/listen/programs/if-youre-listening/is-the-ai-bubble-too-big-to-burst/105948824)
tells me you are on the money with this post, Carl.
👏👏👏
I hope enough people and organisations commit to using AI for good to keep the balance on the positive side.
Agree 10000% 🌟
I’m expecting that some of the fall out from the bubble bursting will be significant competition. Those who have solid fundamentals should be in a good position to buy up any assets of value from those “weaker”. That would be the time that competition will sift companies out. At least, that’s my hunch.
I’m torn… I still think it could go either way but I’m hoping you’re right!
Thanks, Linda. I lean on such events as Tesla’s “excessively automated” assembly lines and their response of hiring a gob of humans to fix it. Perhaps humans will be replaced by AI, but at a slower speed than recently predicted.
I’m in my 50s so I don’t think I’ll be around for our demise … here’s hoping my kids still get to see AI as good not evil!