AI boom: the risks investors are ignoring and what may fall apart

The rapid obsolescence of AI assets only adds to risks that could make a grand unravelling messier

- DEVINA MEHRA

Recently, I heard Vinod Khosla declaring how artificial intelligence (AI) will improve the quality of human life beyond belief.

Recently, I heard Vinod Khosla declaring how artificial intelligence (AI) will improve the quality of human life beyond belief. He noted how wonderful it would be if every person could access medical diagnoses and prescriptions at zero cost. I wondered how something that requires nearly $1 trillion of capital expenditure in a year can be available at scale at zero cost.

Then one realizes that his investments lately have been in AI. His investment in OpenAI, made when it was a non-profit, is alone worth billions. And then the penny dropped. Almost all that you hear about AI and its stupendous capabilities comes from interested parties. Companies, their managements, their investors—most of the hype comes before a fund-raising round or when a public offering is around the corner.

Research reports on AI? Most do not follow the standard science benchmark of peer review used by well-regarded journals. So anyone can write, with no check on whether the data and facts are correct. “Show me the incentive and I will show you the behaviour,” Charlie Munger. Turns out this is true of both AI companies and their models.