We’ve been arguing that the hype surrounding AI is grossly oversold. It’s starting to look like others are beginning to realize this as well.
AI is something I write about off and on here. If you’ve read Freezenet’s previous articles, you’ll know that I’ve long been skeptical about some of the wild claims surrounding AI. These claims include how AI will lead to humanity going extinct, AI is going to end the viability of humans writing content of any kind, artists will no longer be able to make a living, and a vast majority of humans are going to be out of work soon because AI is going to take over everything.
There are many examples of people believing the AI hype so much that they went to work being the first to build a system that totally replaces humans. In multiple cases, business owners invested heavily in an AI that would replace journalists completely because news writing, in their minds, could be automated and they would save incredible amounts of money on labour costs. Every time, those efforts fell completely flat, leading to substantial embarrassment and considerable cleanup work on, ironically, humans part.
There were also efforts to use AI to replace the work of lawyers. One legal team thought it would be a fantastic idea to use AI to write their legal briefs. This, unsurprisingly, ended badly for those lawyers who found themselves facing questions from a judge as to why they were giving him references to fake cases. Separately, there was the example of DoNotPay where someone was trying to create an AI that would replace lawyers. That also ended badly with the operation gradually shutting down after the output ended up being terrible.
Going through the history of AI in use, history is already littered with examples of that ending badly. Yet, that didn’t stop the AI hype where some insisted that these are just mere stumbling blocks for AI. For them, the technology simply needed refinement. A few kinks in the code needed to be worked out, they said. Give it time and it’ll be practically perfect in every way, they insisted. Talking points like these were pushed by those fearing the end of time – AI Doomers as I like to call them – as well as those who think they are on the verge of the next industrial revolution and they want to be the first to get there.
Personally, I found myself having a rather unpopular opinion on the subject – that there is excessive hype surrounding AI and that it was little more than the latest craze. Indeed, there are a lot of fads out there that follow along a similar trajectory like this. Examples include Pog, Tickle Me Elmo, Cabbage Patch Kids, Y2K, Blockchain, and NFTs. Products that have been heavily hyped up. Some of them had their benefits grossly oversold. Plenty of these examples had plenty of money exchange hands as people honestly believed that they were the next big product, the next disaster, or the next technological revolution. Yet, in every example, the hype eventually crashed out once people realize how silly it all was. Planes were not going to fall out of the sky from Y2K, Blockchain wasn’t going to be found in everything, and people aren’t going to crash down the doors forever in search of the next Tickle Me Elmo. Similarly, AI wasn’t the next big thing, either.
To be fair, on smaller scale projects, AI might be useful. For instance, translating text from one language to another is certainly something AI can do quite well. Having AI check your grammar might be something AI can help with. Summarizing content might be something AI can do reasonably well too. That’s why I was legitimately worried about Google Overview because, in part, summarizing online content and producing an in-house answer is, in fact, a plausible thing AI could do. So, I’m not saying AI is completely worthless, but the capabilities of AI is, in most circumstances, oversold.
Yet, after all of that, I was repeatedly told that I didn’t know what I was talking about. AI was going to change everything, I was told. This wave of innovation was different this time. Large companies are investing heavily in it unlike some of the other aforementioned technologies beforehand. This one was different! I’ll soon find out, just I wait and I’ll see. Hey, I’m totally open to being wrong on anything. I didn’t think YouTube was going to be financially viable in the long term throughout the mid-2000’s due to bandwidth costs and, well, I guess I was wrong on that thanks to Google buying YouTube.
While the reasons for continuing to believe that AI was overhyped kept stacking up in my mind, it often felt like I was one of the few people out there thinking along these lines (TechDirt writers have similar thoughts on this as well). So, you can imagine the degree of satisfaction I got when I stumbled across this article today which talks about the possibility that the AI hype might be overblown:
Is artificial intelligence overrated? Ever since ChatGPT heralded the explosion of generative AI in late 2022, the technology has seen incredible hype in the industry and media. And countless investors have poured billions and billions of dollars into it and related companies.
But a growing chorus of naysayers is expressing doubts about how game-changing generative AI will actually be for the economy.
I spoke to Massachusetts Institute of Technology economist Daron Acemoglu, who has emerged as one of AI’s leading skeptics. I asked Acemoglu whether he thought generative AI would usher in revolutionary changes to the economy within the next decade.
“No. No. Definitely not,” Acemoglu said. “I mean, unless you count a lot of companies over-investing in generative AI and then regretting it, a revolutionary change.”
Ouch. That implies we’ve seen a massive financial bubble inflate before our very eyes (note that this interview was conducted before the recent stock market plunge, which may or may not have something do with expectations about AI).
Indeed, there is some speculation that we could be witnessing an AI bubble in the stock market that’s about to burst. Here’s an article on Vox talking about this:
How much is the future worth?
Usually to answer that question, you’d need to ask philosophers or economists. But if you’re a tech CEO, you have an actual number: about $1 trillion.
That’s how much the tech industry as a whole is set to spend building out the artificial intelligence industry over the coming years. And even in Silicon Valley, where several companies have market capitalizations that start with “T,” a trillion dollars is a lot of money. And while you won’t find more fervent evangelists for AI anywhere than in the C-suite of companies like Google and Microsoft, eventually, all that money has to be recouped. The alternative would be an economic meltdown of the sort we haven’t experienced for years.
Which may just well be in the process of happening.
On Monday, the stock market continued days of heavy losses, with the S&P down 3 percent by the close of day. The blood-letting was led by many of the same tech companies that had driven the market to record highs in recent months, with AI chip maker Nvidia falling by nearly 7 percent, and Amazon dropping 4 percent.
There are a lot of reasons why the bottom has at least temporarily fallen out of the market, including the possibility that the Federal Reserve has been too slow to cut interest rates in the face of a weakening US economy. Recent data around US hiring and manufacturing activity have come in weaker than expected, helping to fuel this sell-off.
But there are real concerns that despite the hundreds of billions that have been spent so far to build up the AI industry, and the hundreds of billions that are projected to be spent in the years to come, AI companies themselves aren’t yet producing much in the way of economic value. And they may not for the foreseeable future.
That sound you hear could be an AI investment bubble going pop.
This isn’t the only source delving into this. Here’s another article on Futurism which has similar questions about the viability of AI:
Tech stocks crashed Monday morning, continuing last week’s global selloff and raising concerns over slowing economic growth.
Shares of tech giant Apple fell over four percent following news that Warren Buffett’s Berkshire Hathaway had sold almost half of its stock in the iPhone maker.
And AI chipmaker Nvidia plunged as much as 13 percent when markets opened, following The Information reporting that its next-generation AI chips would be delayed by three months, though it rebounded to a loss of around six percent by midday.
There are several factors at play, including the Federal Reserve’s sluggish trajectory toward cutting interest rates and a payroll report revealing a sharp slowdown in the number of new jobs in the US last month.
But the sharp selloff could also be indicative of growing disillusionment with the priorities of the tech industry, with analysts becoming increasingly concerned that generative AI has yet to generate any significant profits despite untold billions of investment.
Could this week’s tech wipeout be symptomatic of a growing “AI bubble” that’s set to burst? It’s tough to say for sure, and there are many factors at play — but there’s no question that lean times for tech will tighten the timetable to profitability for AI experiments.
Just months ago, such coverage would be completely unheard of. You were more likely to read coverage about how Nvidia was the secret sauce to huge amounts of return on investment thanks to the company leading the way on AI among other things. Now, I am witnessing other sources starting to publish articles with a similar level of skepticism that I had early on in this whole AI hype train. It is increasingly looking like the skepticism I expressed earlier that were dismissed as crazy talk is now starting to come off as prophetic. Go figure.
At most, AI might help the workflow in some industries. AI is great when it comes to building off of previous work, but creating new works, keeping up with the latest events, or just creating something new on a regular basis, eh, not so much. There’s still a place for humanity in things like the arts, journalism, law, an other fields.
