“AI still remains, I would argue, completely unproven.”
Fake It
Experts are growing increasingly concerned over early signs that the frenzy surrounding AI could collapse in on itself — a bubble which, if it bursts, could end in disaster.
Take James Ferguson, founding partner of the UK-based macroeconomic research firm MacroStrategy Partnership, who recently sat down with Bloomberg‘s Merryn Somerset Webb for an episode of the “Merryn Talks Money” podcast to argue that there are already plenty of warning signs.
“AI still remains, I would argue, completely unproven,” he told Somerset Webb, as quoted by Fortune. “And fake it till you make it may work in Silicon Valley, but for the rest of us, I think once bitten twice shy may be more appropriate for AI.”
Dot AI Bubble
It’s a notable vote of no confidence, highlighting growing concerns that the sheer amount of capital being poured into AI could lead to a dot-com-style bubble.
And it’s not just Ferguson who has voiced concerns.
“This is precisely what happened with the Internet in 1999, autonomous driving in 2017 and now generative AI in 2024,” tech stock analyst Richard Windsor wrote in a March research note.
Even tech leaders in the industry are warning things could end badly. Former Stability AI CEO Emad Mostaque warned bankers last summer that “I think this will be the biggest bubble of all time.”
“I call it the ‘dot AI’ bubble, and it hasn’t even started yet,” he added.
Ferguson noted some glaring shortcomings with the technology, including “hallucinations,” a term used to denote lies dreamed up by large language models like OpenAI’s GPT-4. It’s a problem that has persisted to this day, with some experts arguing that it’s an intrinsic quality of the tech, meaning that it may never be solved.
“If AI cannot be trusted,” Ferguson told Somerset Weebb, “then AI is effectively, in my mind, useless.”
Then there’s the sheer amount of electricity needed to train and upkeep these AI models, making them too “energy hungry.” Last week for instance, news emerged that Google’s emissions rose by almost 50 percent in five years, a trend driven by the company’s substantial investments in the AI space and which falls well short of its own climate targets.
In short, the industry could be in for a rude awakening.
“These historically end badly,” Ferguson said. “So anyone who’s sort of a bit long in the tooth and has seen this sort of thing before is tempted to believe it’ll end badly.”
More on the AI bubble: Experts Concerned by Signs of AI Bubble
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