By Dylan Sawhney
It seems that artificial intelligence has been pervasive ever since the release of the first ChatGPT bot back in 2022. At breakneck speeds, companies implement AI this and AI that wherever they can. It might just be silly, do we need AI fridges, toothbrushes, and treadmills? At times, it may even be dangerous; sympathetic AI friends or doctors replace real socialization and more credible advice.
This whole frenzy of development drives more investment into the technology, dumping greater amounts of AI into our lives, which attracts even more investment. However, there are concerns that this value is overstated and that investors are overly optimistic.
New York Times journalist David Streitfeld writes that, “[previous] booms followed a familiar pattern. A few investors assert that new developments, usually involving technology, have changed things. Early believers make money. That draws in more investors. Critics are drowned out. Speculators take over. The boom becomes a bubble and pops.”
This potential bubble is all the more dangerous given the circular flow of money between AI companies and investors. For instance, Nvidia, which produces graphics processing units that large AI models rely on, invests in the very groups that buy these GPUs. This trend fuels unwarranted growth misrepresenting companies, all while tying together juggernauts of industry in riskier and riskier deals.
Nonetheless, Sam Altman, the CEO of OpenAI, brings up another element. He believes that while investors might be a little hyper, progress with artificial intelligence represents one of the greatest human achievements. Obviously, Altman is a biased figure given his financial proximity, but the revolution of AI isn’t something to be underestimated.
In addition, it’s challenging to truly predict how financial markets will operate in the future. On the issue, the Brookings Institution brings up how “experts can rarely forecast bubbles before they actually burst.”
Caution is ultimately the most important factor for investors to possess. Bubbles have happened everywhere, and each time, people swear they won’t get caught in one again.
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