Is the AI boom dead?
Recent comments about the dangers of unlimited AI development have seen a wobble in tech stocks. But the rate of spending is unlikely to slow.
In a matter of a week or so, the talk around the globe is how much of a risk AI might pose, not just to the global economy, but to humanity itself.
Fears that humanity might suddenly become superfluous abound right now, and suddenly key AI leaders are talking about being more circumspect in their previously rampant development of newer and complex models. For a market that has been such huge gains (and quite a lot of volatility too) off the back of the AI story, such news might seem like a very worrying development. Hundreds of billions of dollars are being thrown at the AI revolution, and if this has all been for nought then the reckoning could be quite ugly.
Chances are however that such worries are misplaced. AI leaders like Dario Amodei aren’t talking about giving up entirely on the project. They are instead making the right kind of noises to assuage concerns from governments and policymakers, knowing that tighter regulation of the sector would result if public concern continued to rise.
Talking about it is one thing, but actually slowing development is another. For now, the hyperscaler stocks have not continued Monday’s losses, remaining relatively steady in what has been a difficult month overall for stock markets thanks to rising oil prices and the focus on the renewed rise in interest rates.
We will have to wait for commentary in future news updates to see if development of new frontier models has begun to slow, and then monitor earnings reports from listed tech firms to see if this is carrying over into the broader economy. Investors remain rather on edge about the whole AI story, wanting to believe that it will transform the world economy and deliver real earnings growth while simultaneously worrying that the huge investments made in recent years will take a long time to pay off, if they do at all.
AI SPENDING CHART
One thing is certain, AI isn’t going away, and neither are fears about its long-term implications. But while markets will react to headlines, the real impact needs data. So far, that isn’t suggesting a major slowdown in AI development and usage is underway.
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