AI may be both a bubble and a boon

Bubble or bonanza? AI could be both.

- Mike Dolan

Artificial intelligence may well be the future of business and the wider economy, yet the sky-high stock prices it’s generating may still represent an unsustainable bubble.

Today's constant fretting about whether frothy tech stocks are in a bubble is rooted in fears that AI may not live up to the hype and that business returns will therefore never justify the blistering investment we're seeing on advanced chips as well as the infrastructure and energy needed to support Al’s vast processing needs.

Acres of columns will be written on the “AI hype” question in the coming months, with most likely concluding that “it’s too early to tell”.

Some early studies say companies are not yet reaping significant returns from AI, even as an estimated $3 trillion of investment is expected to be ploughed into the technology over the next three years. But generating returns was always going to take time.

As to the consensus view? Maybe that’s best left to Al itself.

In response to the question “Is AI a bubble?”, Google’s “AI Mode” concluded: “While the core AI technology is considered a genuine and potentially revolutionary development, there is significant debate about whether the current market valuations are sustainable or if the sector is experiencing a bubble-like period of over-exuberance and speculation.”

Productivity gains and revenue growth over the coming years will ultimately determine Al's value, it adds, clearly reluctant to talk itself out of a job just yet.