AI Bubble Bursting: Warning Signs & Consequences
- Even as the market continues to bet heavily on artificial intelligence, the dominance of a single method of building AI - which so far has not delivered returns...
- Tom Clarke, Science and Technology Editor at Sky News, talked to several analysts in the field about the causes that could lead to such an outcome and about...
- "If a few venture capitalists go away, nobody's really going to be very sad," says Gary Marcus, an AI researcher and professor emeritus at New York University.
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AI Bubble Fears Grow as Investment Outpaces Returns
Even as the market continues to bet heavily on artificial intelligence, the dominance of a single method of building AI – which so far has not delivered returns commensurate with investment – is fueling fears of a bubble on the verge of bursting.
Tom Clarke, Science and Technology Editor at Sky News, talked to several analysts in the field about the causes that could lead to such an outcome and about the possible consequences.
“If a few venture capitalists go away, nobody’s really going to be very sad,” says Gary Marcus, an AI researcher and professor emeritus at New York University.
But with much of this year’s U.S. economic growth due to investment in artificial intelligence, the “blast radius” could be much larger, Marcus warns.
“In the worst case, the entire economy collapses. Banks run out of cash, bailouts occur, and taxpayers end up paying.”
There are already some worrying signs that we are heading towards such a scenario.
It is estimated that Microsoft, Amazon, Google, Meta, and oracle will spend an estimated $1 trillion on AI by 2026.
openai,the company that created the revolutionary ChatGPT language model,has also pledged to invest $1.4 trillion over the next three years.
Simultaneously occurring, though, investors are not getting much in return for these huge sums.
Clarke gives the exmaple of OpenAI, which expects a profit of just over $20 billion in 2025 – a sizeable amount, but well below the level of assumed expenses.
The Size of the AI Boom – or Bubble
The AI revolution began in 2023 with the release of ChatGPT-4, which brought a spectacular leap in natural language, programming, and image generation.
The progress was mainly based on the massive scaling of computing power and data volume.
GPT-4 used thousands of times more processing power than its predecessor, GPT-2, and was trained on a huge number of parameters-virtually all the text, image, and video data available on the Internet.
This approach has led to an explosion in demand for high-end GPU chips, fueling the accelerated growth of companies like Nvidia.