At one point on Monday, Nvidia was down more than 7 per cent and the Magnificent Seven lost more than US$500-billion in market capitalization
Kean Birch is director of the Institute for Technoscience & Society and Ontario Research Chair in Science Policy at York University .
The question of why this is happening now is interesting: It looks like the generative AI bubble is finally bursting.that generative AI technologies look like money pits with significant social costs attached: this prediction seems increasingly on point. Investors are less and less confident that generative AI technologies will provide the necessary returns on the huge investments made.
Ross Sandler, an analyst at Barclays Bank, argued that the investment in generative AI is large enough for 12,000 new products, which sounds like an extraordinary number – and not in a good way. Mr. Covello noted that “people generally substantially overestimate what the technology is capable of today,” especially when it comes to reducing operational costs. He also pointed out that while the AI they use at Goldman Sachs is faster, it raises costs six-fold.
First, all bubbles are driven in part by a self-fulfilling fear of missing out. Investors know that a bubble is a bubble, but they have to participate because they still make money. The past couple of years have been very good to investors in the stock market, especially those investing in the so-called “hyperscalers” whose infrastructure investments underpin generative AI – for example, Alphabet, Amazon, Microsoft, and Nvidia.
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