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Are AI firms heading for a downfall? Specialists think we're at the height of a bubble, about to pop
Many new AI businesses are asking for high evaluations, and investors who are eager to invest in the next ChatGPT and OpenAI, are investing an enormous amount of money in them. However, professionals in the field are cautioning that this AI trend is just another bubble that is on the verge of bursting.
Investors are investing billions in the AI industry, however, experts suggest that the majority of AI firms are overpriced. There is an escalating concern about a potential "AI bubble," according to a Futurism report.
Research conducted by technology stock expert Richard Windsor, featured by CNBC, illustrates the dangers tied to the hype around AI. He compares the scenario to the game of musical chairs, indicating that funds are being poured into the AI industry without proper consideration of company basics, which could leave investors limited choices when the trend slows down.
The latest happenings have only exacerbated worries. It is said that Cohere, an AI company that focuses on generative technology, is in advanced talks for a deal that could see its value soar to an astonishing $5 billion. Microsoft's unorthodox investment of $13 billion in OpenAI and its recruitment drive from AI startup Inflection AI have left investors puzzled, prompting queries about Microsoft's game plan.
Windsor makes comparisons between the present excitement around AI and previous investment frenzies, like the internet rush in 1999 and the excitement for self-driving cars in 2017. Even with concerns about potential earnings, investors keep investing huge amounts of money into AI companies.
Kai Wu, the creator of Sparkline Capital, cautions about a significant surge in AI investment. Some are seeking opportunities regardless of the price, while others foresee a potential bubble burst.
Emad Mostaque, the former chief executive of Stability AI, anticipates that the AI boom could outdo all previous ones, referring to it as the "dot AI" bubble.
The CEO of DoubleLine Capital, Jeffrey Gundlach, compares the existing fascination with AI to the dot-com bubble. At the same time, John Hussman from Hussman Investment Trust cautions about excessive speculation.
The research note from Windsor emphasizes the financial success of the chip manufacturer Nvidia during the surge in AI, while also pointing out possible dangers for those offering generative AI services.
As the excitement persists, Windsor forecasts a merger in the sector, with bigger firms that lack internal AI skills likely to take over startups.
The atypical agreement with Microsoft and climbing valuations of startups are causing apprehension amongst specialists, who are skeptical about the sector's capacity to transform buzz into financial gain.
Rumman Chowdhury, an expert in AI ethics, has warned that the ongoing problems with the precision of AI chatbots are raising questions about the long-term viability of the industry.
Drawing parallels to previous market surges, the uncertainty persists: Will the excitement around AI experience a comparable collapse, or will it surpass predictions? We can only determine this with time.
(Incorporating information from various sources)
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