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Collapse of AI firms? Professionals predict we are at a bubble's apex, about to explode.
Numerous AI firms, even in their early stages, are commanding high market values, with investors eager to invest in the next big thing like ChatGPT and OpenAI, are infusing them with endless capital. However, sector specialists caution that this spike in AI interest could be another bubble, poised to pop.
Investors are heavily investing in the AI industry, but experts caution that the majority of these AI firms may be overpriced. They are growing more concerned about a potential "AI bubble," as highlighted in a Futurism report.
Research notes from technology stock expert Richard Windsor, featured by CNBC, clearly illustrate the dangers tied to the current obsession with AI. He compares the scenario to a round of musical chairs, where funds are poured into the AI industry without properly considering the basic company details. This could leave investors with limited choices when the momentum slows down.
The recent happenings have only heightened worries. There are rumors that Cohere, an AI startup that focuses on generative technologies, is in advanced talks for a transaction that could value the firm at an astonishing $5 billion. Microsoft's unusual $13 billion investment in OpenAI and its recruitment surge from AI startup Inflection AI have piqued the interest of investors, leading them to question Microsoft's approach.
Windsor likens the current excitement around AI to previous periods of intense speculation such as the internet surge in 1999 and the fervor for self-driving cars in 2017. Even with uncertainties regarding profit, investors persist in investing huge amounts in AI companies.
Kai Wu, the creator of Sparkline Capital, cautions about a significant surge in AI investment. Some investors are pursuing opportunities regardless of the price, while others anticipate a market crash.
Emad Mostaque, the former chief executive of Stability AI, anticipates that the AI bubble could exceed all previous ones, referring to it as the "dot AI" bubble.
Jeffrey Gundlach, the CEO of DoubleLine Capital, compares the current enthusiasm for AI to the dot-com bubble. Meanwhile, 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 hazards for those supplying generative AI services.
As the excitement persists, Windsor anticipates a merging trend in the sector, where larger firms lacking internal AI capacities are expected to take over startups.
The unique agreement with Microsoft and the skyrocketing values of startups have led to apprehensions among professionals, who are skeptical about the sector's capacity to convert buzz into earnings.
AI ethics specialist Rumman Chowdhury warned that the ongoing struggle of AI chatbots with precision problems contributes to concerns about the long-term viability of the industry.
Analogies are being made to previous market bubbles, raising the question: Will AI hype follow the same path or will it surpass predictions? The answer will only be revealed with time.
(Incorporating information from various sources)
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