AI
It’s swallowed billions of dollars, but has AI lived up to the hype?
Summary
- The ‘magnificent 7’—Microsoft, Apple, Tesla, Amazon, Meta, Alphabet & Nvidia—steered the AI-fuelled rally on Wall Street over the past year. But the initial hype is now giving way to uncomfortable questions. “What $1 trillion problem will AI solve?” an analyst recently asked. We have some answers.
New Delhi: On 24 July, the Nasdaq had its worst day in two years. Six of the‘magnificent seven’ stocks—Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta and Tesla—plunged, wiping out over $1 trillion in investor wealth. The selloff in this elite group of high-performing tech stocks was triggered by concerns over how long it will take investments in artificial intelligence (AI) to pay off. Market watchers are worried that the AI frenzy to transform businesses and boost earnings might fizzle out. Unimpressive earnings from Tesla and Google owner Alphabet, only added to their woes. Others in the pack of seven are set to report their numbers in the coming weeks, keeping investors on edge.
Since AI’s most popular offering, OpenAI’s ChatGPT, debuted two years back and made esoteric AI tech accessible to the masses, there has been excitement over intelligent machines taking over mundane tasks or assisting humans in complex work. Geeks declared that costs would drop and productivity skyrocket, eventually leading to ‘artificial general intelligence’, when machines would run the world.
Huge sums were poured into companies focused on building AI solutions. In 2023, venture capital investments into Generative AI (a subset of AI to create text, images, video) startups totalled $21.3 billion, growing three-fold from $7.1 billion in 2022, according to consultancy EY.
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