Oct 19, 2023 - Technology

AI's hype balloon fills with investor helium

Illustration of a helium tank blowing up a dollar bill balloon.

Illustration: Maura Losch/Axios

Predictions of a massive payoff from AI investments are headed into the stratosphere even as the sector's actual profit, or even revenue, remains sparse.

What they're saying: The entire global stock market — roughly $100 trillion in value today — will triple in worth by the end of the decade, thanks to AI, investing guru Cathie Wood told the Ted AI conference Tuesday.

  • Within a decade, AI will be able to "do 80% of 80% of all jobs that we know of today," investor Vinod Khosla said at a Wall Street Journal conference this week.
  • "We believe we are poised for an intelligence takeoff that will expand our capabilities to unimagined heights. … We believe any deceleration of AI will cost lives. Deaths that were preventable by the AI that was prevented from existing is a form of murder," Marc Andreessen wrote Monday in his "Techno-Optimist Manifesto."

What's happening: Nearly a year after the debut of ChatGPT, the rhetoric promoting AI is pushing toward new extremes. That's happening at the same time skepticism mounts over the likelihood the technology will drive near-term financial gains — and warnings of an AI-driven apocalypse remain dire.

  • AI is the one hot genre in the tech investment playbook right now, climbing to $17.9 billion in startup investments during the third quarter, per Pitchbook data cited by Bloomberg — while overall investments fell 31% to $73 billion total.

Of note: The most inflated predictions of AI's impact and potential profit are coming from leaders in the venture capital and investing world — not laborers in the trenches of machine learning, who grapple every day with the practical difficulties of getting the new technology right.

  • Wood came to the fore as a populist stock-picker during the pandemic, when her crypto-heavy portfolio soared.
  • It has since returned to earth, as Axios Markets' Matt Phillips reported a year ago. Wood's Ark Innovation ETF has remained grounded since then.

The other side: Extreme predictions of AI's positive impact are emerging in part to counter a wave of "AI doomer" nightmare scenarios that have been widely embraced, not only by critics of Big Tech but also by many experts in the field.

  • AI skeptics believe the industry's headlong rush to develop and deploy broadly capable artificial general intelligence (AGI) risks unleashing an essentially unknowable and potentially all-powerful "alien life form" — one that could escape human control and even eliminate our species.
  • After a notable roster of both experts and activists called for a six-month pause in developing the most advanced AI models last spring, machine learning pioneer Geoffrey Hinton said he left Google in order to be able to speak freely about such dangers.
  • Yoshua Bengio, another key figure in the evolution of contemporary AI, suggested this week that we will need a "humanity defense organization" to protect against off-the-rails AGI.

The other other side: Plenty of smart observers see today's AI wave as neither a "save the world" panacea nor a doomsday machine but simply as the latest leap in digital technology's capabilities.

  • That would mean it will come with the usual tally of financial winners and losers, and of productivity gains and economic disruptions.
  • Industry research firm IDC predicted this week that spending on generative AI by enterprises, which is roughly $16 billion this year, will soar almost 10 times to $143 billion in 2027.
  • That's impressive growth — but doesn't come anywhere close to a $200 trillion leap.

Go deeper: The AI noise machine is blaring

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