Has the AI bubble burst? Wall Street wonders if artificial intelligence will ever make money
In the 18 months since ChatGPT kicked off an AI arms race, tech giants have promised that the technology is poised to revolutionize every industry. However, they haven’t shown significant revenue gains from AI or profitable new products. Investors are starting to get antsy.
Amazon’s less-than-impressive earnings and outlook could be mostly chalked up to concerns that it is spending a ton on AI without much to show for it. Intel’s stock also plunged after the company announced cost-cutting measures following big spending on AI.
Investors are starting to question if all of this AI investment is worth it or just another shiny object that the industry is chasing. Big tech companies like Google, Microsoft, and Meta continue to signal that they plan to spend even more on AI infrastructure investments.
However, some investors believe that the return on investment for AI may take too long. They argue that the technology isn’t designed to solve complex problems that would justify the costs.
Tech CEOs, on the other hand, believe that the risk of underinvesting in AI is greater than overinvesting. They’re willing to spend heavily on data centers to ensure they don’t miss out on the AI race. But at some point, the pressure from investors to prioritize revenue growth over infrastructure investments will be strong, leading tech leaders to pull back.
Overall, the level of investment in AI is deemed unsustainable in the long term.