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Good morning [%first_name |Dear Reader%],
So, here’s the big news from last week.
Asian shares dropped in Thursday morning trading, with Tokyo’s benchmark losing more than 1,000 points at one point and closing down more than 3%, as pessimism set in over a nose-dive on Wall Street.
U.S. stock indexes suffered their worst losses since 2022 after profit reports from Tesla and Alphabet helped suck momentum from Wall Street’s frenzy around artificial-intelligence technology.
Stock market today: Asian shares dive after a wipeout on Wall Street as Big Tech skids, AP
In a sense, this day of reckoning was coming for AI? Again, I try not to read too much into stock market gains and losses, but this specific event feels important.
Until recently, the objections to AI seemed to be ethical or moral. Today, the primary objections are financial. A couple of weeks ago, I wrote about how AI’s biggest threat is coming from the “capitalists” — driven by VCs, bankers, and analysts. Last week, the same people chose to put money where their mouth was, and decided that all this flagrant AI spending was making them a bit uncomfortable. AI wants to zoom into the future, and the capitalists are hitting the brakes.
The financial scepticism around AI became much more apparent last week when multiple tech companies declared their results—which triggered the sell-off.
First, Alphabet (aka Google) revealed that it had spent US$13 billion in the last quarter for “AI capex”—that’s stuff like chips, data centres, and models. Last year, for the same quarter, it spent less than US$7 billion. Tesla also admitted that it had increased AI spending significantly over the past few quarters.
In an interview with Bloomberg, Mark Zuckerberg, CEO of Meta, said the quiet part out aloud, “I think that there’s a meaningful chance that a lot of the companies are overbuilding now and that you look back and you’re like, oh, we maybe all spent some number of billions of dollars more than we had to.”
Sundar Pichai, CEO of Alphabet, also said pretty much the same thing in the company’s earnings call.
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