The AI hype reached a feverish peak in the last few years. With AI darling stock, NVidia, taking a beating, questions are emerging.
When it comes to hype trains, there’s always a build up and a feverish peak. As they say, though, what goes up must come down. For context, we’ve seen a number of things in the world of technology hyped to death. Whether that was BitCoin, block chain, facial recognition, or even BitTorrent technology, it seemed that the technology was going to be inserted into pretty much every aspect of our lives and we were simply on the verge of seeing the next industrial revolution unfold before our eyes.
Artificial Intelligence (AI) was supposed to be no different. While the hype of other technologies was considerable, more often then not, those hype trains paled in comparison to AI. AI was going to be the next big industrial revolution, they claimed. AI was going to replace humans for everything, some argued. Companies thought that AI was going to mean that there would be no more need for human labour at all. Need a lawyer? AI. Need a doctor? AI. Need someone to write your articles? AI.
Things reached absurd levels when there was seemingly an entire industry of AI doomsday people predicting that AI will destroy everything. Whether it was wild claims of making Hollywood script writers a thing of the past, AI taking over government, make the profession of an artist or photographer be a thing of the past, or even going to the comically absurd extreme of proclaiming that AI was going to mean that all of humanity was going to go extinct, no wild claim about AI was going to be too outlandish. For those people, I have long referred to them as “AI doomers”.
Mainstream media, such as major broadcasters, did little to nothing to stop the hype train. Many networks were practically falling over each other trying to platform anyone and everyone who would hype things further. Mainstream media journalists hung on their every word and didn’t question a thing they said despite a number of their claims being ridiculous. Mainstream media journalists, during the AI hype, decided to not do their job and, instead, focus on whatever click bait title would get the most clicks rather than actually bother with this whole thing of “informing the public”. As a result, they came off as naive fools, though in the world of technology, that gullibility is nothing new. Whatever tall tale a self-described “expert” had to say was the definitive and unquestioning truth – so long as it furthered the AI hype.
As time wore on, signs were further emerging that the AI hype was going too far. AI appeared in products where they clearly didn’t belong. In April, the absurdity of putting AI in everything reached peak stupid when Logitech made the dumb decision of creating an AI powered mouse. The entire tech world gave the concept a collective facepalm and the dominant question emerged: “What were they thinking?”
Yet for those hyping AI and playing the role of AI doomer, this idea didn’t phase them, but rather, emboldened them to push their respective narratives. For them, the AI industrial revolution was happening before their eyes and we are entering into an incredibly big, bold, new era.
While I have personally long questioned the actual application of AI and wondered what the actual value it all was, I recall repeatedly being told (especially by people who knew far less about technology then I did) that I was clearly off base with this one. Everyone saw the media hype and concluded that it all was true. For them, anyone doubting the power of AI was only fooling themselves. They saw the light and it was a mystery why someone like me hadn’t.
Indeed, one of the hugely hyped up name that is often bandied about is ChatGPT, a generative AI technology designed to write content that sounded as though a human wrote it. While the ability to translate content from one language to another was impressive, the applications were a bit more on the limited side. Sure, you could “talk” to ChatGPT about different subjects, but many took the hype to extreme and say things like how it was a threat to national security given it’s power to push disinformation or how students won’t have to write their papers when ChatGPT would do it for them among other things. Heck, journalism was practically a dead profession walking, many proclaimed.
The problem with generative AI technology like ChatGPT is that it was only designed to sound like someone is on the other hand writing this content. Was it meant to write facts as they happened? No, there was a specific limitation in that the knowledge was limited to a certain date in the recent past. Generative AI doesn’t concern itself with actual facts, only that it sounds realistic. There in lies the crux of the problem of pushing AI as a new revolution. Is AI an interesting tool? Sure. Can it be fun to play around with? Probably. Was it going to replace humanity in the world of writing? Absolutely not.
Ultimately, AI can be used to assist a human to write better. Things like fixing grammar mistakes or tightening up language is certainly a task AI is up to, but replace that human for writing? Not happening in any practical scenario.
About the only legitimate worry about AI that I’ve seen revolved around Google Overview. As we noted back in May, Google Overview was going to take search results from around the web and push a summary onto users, negating the need to click on external third party websites. Summarizing material was, indeed, plausible and within the theoretical wheelhouse of modern AI systems, but the technology itself ran into problems when Google Overview started spouting obviously wrong answers such as using non-toxic glue to keep the cheese from sliding off of pizza or recommending that people eat rocks. The rollout of Google Overview has been seemingly kept to whispers ever since.
The simple truth is AI is far from perfect and has a very hard time differentiating between fact from fiction (or, in the case of Google Overview, satire from honest feedback).
At any rate, these repeated blunders by large companies had finally caused some to start questioning the AI hype. For those in the stock world, there are plenty of references to “AI stock” as well. Different companies have branded themselves as an “AI” company developing their own “revolutionary” AI. Of all the companies out there closely associated with AI, NVidia is probably the most recognized one out there. Over the last few months, you might have noticed a steady incline in the overall stock indexes. A big reason for that? NVidia.
Many people who continued to believe the AI hype ultimately settled on NVidia as the corporation to help bring in this new AI industrial revolution and it would be NVidia to be at the top of the pile to acquire untold amounts of wealth once the AI technology they were working on was going to be deployed. In the last month or so, however, many investors have questioned whether or not NVidia was actually going to deliver on the promise of an AI revolution. An excellent question being asked by some investors, at this point, is what the return on their investment ultimately was. What is going to propel the company to massive new heights of unimaginable wealth? Increasingly, the answer might not be as glamorous as originally promised.
This week, NVidia’s stock value, once seen as a stock where the sky was ultimately the limit, took an absolute beating. By the end of the trading week, the stock value was down by nearly 14%:
This isn’t exactly the story you’d expect when, just back in June, NVidia was making headlines about how they have officially become the worlds most valuable company. Headlines like that really felt like only yesterday. Today, however, the headlines are much more grim. For instance, earlier this week, one article noted that NVideo CEO, Jensen Huang, lost an estimated $10 billion in a single day:
Nvidia CEO and co-founder Jensen Huang’s fortune shrank by nearly $10 billion after the chipmaker’s share price fell amid a wider selloff of major tech stocks on Tuesday.
On Futurism, one journalist seemed surprised that NVidia is not printing money like they used to:
Nvidia Should Be Printing Money Right Now by Selling AI Hardware. Instead, Its Stock Is Falling
Earlier this year, AI chipmaker Nvidia was riding high, enjoying a record-breaking valuation of $3.3 trillion.
But this summer, investors started asking some tough questions. Shareholders started getting cold feet over AI companies’ sky-high valuations, as CNN reports, with widespread skepticism causing stocks to come crashing back down.
As the company selling the shovels for the goldrush, Nvidia should be making money hand over fist. But instead, it wiped a massive $279 billion off its value on Tuesday, a precipitous drop of 9.5 percent in share price.
The slump even erased about $10 billion from CEO Jensen Huang’s personal net worth, his biggest single-day drop according to the Bloomberg Billionaires Index.
Something’s off, in other words, despite the company’s growing revenue.
Is this just the market’s correction to signs of a slowing economy? Are investors becoming wary of major investments in largely unproven tech that’s still far from turning a profit?
While it’s still too early to tell if Nvidia’s most recent troubles are a canary in the AI coal mine, there are plenty of signs to suggest that growing skepticism is starting to put a real damper on the hype surrounding AI.
Other’s have been noting that this slide is not only a bad one, but probably the worst stock slide for a single company ever. From BNN:
Four weeks after US stocks buckled amid a global flight from risk assets, chipmakers touched off another bout of equities selling when a pair of industry analysts rekindled worries that the mania surrounding artificial intelligence had gone too far.
Nvidia Corp. shares tumbled 9.5%, wiping out $278.9 billion in the biggest loss of value ever for a US stock. It is now down 14% in the three sessions since it reported earnings that failed to live up to lofty expectations. All 30 members of the Philadelphia Semiconductor Index sank at least 5.4%, with On Semiconductor, KLA Corp. and Monolithic Power Systems Inc. down more than 9%. The Nasdaq 100 sank almost 3.2%.
Nvidia shares lost another 2% in late trading after the US Justice Department sent subpoenas to it and other companies as it seeks evidence that the chipmaker violated antitrust laws.
If anything, this all looks like a massive bubble popping. While the slide has been more gradual rather than a one or two day crash, it’s still painful to watch from an investment perspective. While there is no doubt that there are those who will continue to hype the magic that is AI, these latest bits of news and a plummeting stock value is not exactly helping their cause.
Some are still asking if this is just a temporary correction in the grand scheme of things, but the value proposition for AI was not exactly coming to fruition. All those wild promises are starting to look more and more like just that, promises. Personally, I’m thinking that this is just the AI hype bubble finally bursting and expectations for value are finally returning to much more realistic levels.
