Are we seeing an AI revolution, or is this another tech bubble?

Artificial Intelligence or AI, is quite a buzzword these days. Knowingly or unknowingly we all have been using it for our day-to-day needs through speech recognition, image processing, language understanding, self-driving cars, virtual assistants and bots on apps, and predictions, among others. 

A trending subject of conversation among influencers, students, researchers, policymakers and investors have been the increased use of tools like ChatGPT to write articles or to do translations, stockimg.ai for image generation, Wordtune to summarise large documents or Looka to create logos like a pro.

The AI buzz

AI's revolutionary and transformative potential has prompted tech giants like Microsoft, Alphabet, Qualcomm, Amazon, Intel, IBM and Chinese firms Tencent and Alibaba as well as AI-based startups to join the race.

• The introduction of Bard by Google and the investment of $300 million in Anthropic, valuing it at $500 billion, shows their uncertainty. While the recent launch of Bard may have fallen short initially, it is expected to gain traction with visual responses and integration across various Google services.
• Qualcomm's 'On Device Stable Diffusion AI' allows the creation of images from descriptions an user feeds using a billion parameters.

• Zuckerberg's Meta, introduced Sandbox, an AI tool aiding advertisers with copywriting, and SAM, an image recognition system within images. However, the Metaverse project is causing annual losses of $10 billion for Meta.
• Canadian start-up Cohere is also looking to raise money that could value it at $6 Billion.
• Public AI stocks like C3.AI, Bigbear.ai, and BuzzFeed are showing an upward trend too. But are losing thousands of dollars every year while riding the hype wave of AI, especially in this environment of high-interest rates.
• Surely all of us have seen lifelike fake AI songs by Kanye and Drake and the subsequent controversy that followed.

• Twitter is full of AI threads, with everyone propagating one view or the other.

Investments should be based on the technology's true value, not influenced by herd mentality. Social media and the opinion leaders fuelling the AI hype are creating an illusion of endless growth. Everyone wants to keep up, including digital creators and influencers, driven by a get-rich-quick mentality. This kind of speculative trading causes artificially high prices, leading to 'Bubble Formation'.

Is the AI buzz just another bubble waiting to burst?

• What remains a concern for the companies and investors, is if they will recover investments and get solid returns. History bears testimony to a sudden and significant decline in prices of overvalued assets or stocks, after speculative trading, loss of investor confidence leads to bubble bursts.  In today's interdependent world, better connected than ever, the threat looms more than ever.
• Even ChatGPT won't answer the query if AI is headed to a bubble, or is already in it.

Extremely weird that Google is launching their own “Bard” chatbot while also investing in Anthropic’s “Claude” chatbot.

Feels very indecisive. Even the folks at Google don’t have a strong vision for how this will play out.

Conviction around AI is in short supply right now. pic.twitter.com/uzihGZCsb7

— John Coogan (@johncoogan) February 8, 2023

• To tackle these concerns, cooperation among researchers, policymakers, and industry stakeholders is crucial in establishing responsible and ethical implementation of the technology. Transparency, equity, and responsibility are vital, requiring investments in ethical frameworks. However, this surge also signifies AI is not just a passing fad given its transformational potential.

Bubbles that exploded

Bubbles are difficult to detect and usually become evident only after they burst, causing substantial financial losses and market instability. Here are some examples from the past:

• The .com(dot com) bubble was a speculative craze in the late 1990s, where internet company stocks rapidly rose after numerous businesses moved online suddenly and then collapsed.
• 1929's Great Depression resulted in wiping out 15% of the global GDP bursting of the speculative bubble resulted in bank failures, unemployment, poverty, and a prolonged period of economic hardship, affecting economies worldwide.
• The Great Recession of 2008 was a severe economic downturn, wiping out 1% of global GDP triggered by American banks giving out loans in the housing market indiscriminately leading to the collapse resulting in widespread financial disruptions around the world.
• Cryptocurrencies, in the recent past, have faced bursts in small pockets accompanied by a sharp market correction and widespread selling, substantial losses for investors and a decrease in overall market sentiment towards them.