The free market has spoken.
Cool Down
The red-hot AI industry may be headed for trouble, Bloomberg reports, after tepid earnings reports from tech companies dismayed Wall Street, which expected much bigger profits from the gargantuan infusion of cash into AI.
Take Microsoft, which has gone big into AI with its business partner OpenAI, but which saw declines in its stock price since it released its earnings report this week, dropping from an all-time-high for this year at more than $467 in early July to now treading around $406 on Friday midday.
Other tech behemoths including Google and Amazon also saw significant declines in their stock price after releasing their earnings reports, which didn’t meet investors’ expectations, according to Bloomberg.
Wall Street analysts sounded the alarm because they weren’t seeing significant profit from AI, and yet all three tech companies have invested heavily into buying high-powered AI chips and building spendy data centers.
Because of the less-than-stellar earnings from these tech companies, other corporations that have been turbocharged by the AI gold rush also saw declines in stock price, Bloomberg reports. For example, Silicon Valley-darling Nvidia suffered a 6.7 percent decline on stock price on Thursday, and Friday saw this losing streak continuing.
This is all happening in the shadow of a larger stock market slump this week due to factors including a weak jobs report, adding to a general sense of gloom.
Boom or Bust
Will this AI tumble continue, like the dot-com crash in 2000, which saw tech stocks become worthless and many start ups companies go belly up?
Who knows, but analysts like Goldman Sachs’ Group head of equity research Jim Covello are skeptical about AI’s potential because of its cost and limited commercial viability so far.
Beyond the technicals and balance sheet, AI as deployed by private industry so far has often seemed rickety, with rampant hallucinations and security issues — not to mention that lots of consumers vastly prefer dealing with humans versus AI agents and people hate the idea of AI taking away jobs.
What kind of value are people getting from AI, except perhaps for automating sexts with lonely horny people on OnlyFans or committing fraud with deepfakes?
Like Covello, we’re waiting for some results.
More on AI: Microsoft is Losing a Staggering Amount of Money on AI
