The artificial intelligence industry has seen a significant increase in recent years.
Although AI technology has existed for many years, generative AI (GenAI) has made it more widely recognized. Nonetheless, certain investors and analysts have expressed doubts, with some indicating a potential collapse of the AI bubble.
OpenAI CEO Sam Altman has reportedly said that he believes AI could be in a bubble, comparing market conditions to those of the dotcom boom in the 1990s. Alibaba co-founder Joe Tsai, Bridgewater Associates’ Ray Dalio and Apollo Global Management chief economist Torsten Slok have all raised similar warnings.
On Tuesday, tech stocks suffered a shock sell-off after a report from Massachusetts Institute of Technology (MIT) researchers warned that the vast majority of AI investments were yielding “zero return” for businesses. Following a study of 350 workers and 150 corporate executives, MIT discovered that "the vast majority of integrated AI pilots remain stuck with no measurable P&L [profit and loss] impact, while just 5pc are extracting millions in value."
In addition, Meta has reportedly paused hiring for its new Meta Superintelligence Labs (MSL), according to a report from The Wall Street Journal. The halt comes after an intense hiring spree where the firm brought on over 50 AI researchers and engineers from competitors, as part of CEO Mark Zuckerberg's effort to enhance Meta's standing in the AI competition
Some tech industry leaders however believe that they need significantly more time to see a return on their massive AI investments.
For example, Microsoft's CFO, Amy Hood, stated that the company's data center investments are expected to generate revenue from AI for at least the next 15 years. Similarly, Meta's CFO, Susan Li, told analysts that the company anticipates a longer timeline for returns from generative AI. She explained that while they don't expect their current AI products to be a major revenue source in 2024, they believe these investments will create new, profitable opportunities over time.
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