Airbnb picks Alibaba’s Qwen over ChatGPT in a win for Chinese open-source AI
Airbnb ‘relies heavily’ on Alibaba’s Qwen models to power its AI customer service agent, CEO Brian Chesky says
Brian Chesky, co-founder and CEO of the San Francisco-based online accommodation booking giant, said Airbnb “relies heavily” on Alibaba’s Qwen models to power its AI-driven customer service agent, according to a Bloomberg report on Tuesday.
Chesky, a friend of OpenAI founder and CEO Sam Altman, said ChatGPT’s integration abilities were not “quite ready” for Airbnb’s needs. In contrast, Alibaba’s Qwen model was “very good” and “also fast and cheap”, he said. Alibaba owns the Post.
Opinion | With AI looking increasingly like a liability, a storm is coming
It is the tech sector’s projected spending that points to trouble ahead. Are investors prepared to wait for the return on their investment?
A recent Financial Times front-page lead, headlined “Tech stocks suffer $1.2tn AI sell-off”, was followed a few days later by a comment elsewhere that tech stocks were the only cloud over an otherwise sunny Wall Street. Weather forecasters would be ashamed of such a simplistic assertion.
Artificial intelligence and, more generally, tech stocks have become the great overarching gods that dominate the stock market firmament. To suggest they are immortal and the investment sky will remain blue even as they are toppled is naive to the point of being fatuous. It never rains but it pours, to use more mundane language.
It is reminiscent of the situation with IT stocks some 25 years ago when stock price valuations for many companies in what was then the ultra hi-tech information technology sector reached super-high levels, way ahead of profit projections. Some IT companies were actually loss-making but that did not deter fevered investors. The IT bubble consequently collapsed, dragging down most other stocks with it.
Tech stocks now have total revenues of around US$3.5 trillion and their weighted average price-to-earnings ratio is 45. But it is the tech sector’s projected spending, rather than earnings, that points to (potentially big) trouble ahead.
JP Morgan expects AI spending to run into trillions of dollars in the coming years, setting a high bar for the return on investment. The investment bank warned that “to drive a 10 per cent return on our modelled AI investments through 2030 would require ~US$650 billion of annual revenue into perpetuity, which is an astonishingly large number”.
Where could they find equally glamorous (if superficial) attractions? Consumer stocks are unlikely, given how the US middle class is pulling back on spending. Likewise, the unglamorous capital goods sector and the capital-hungry climate change alleviation sector.
The truth is, stock markets tend to focus on the next big thing and the AI sector is looking less like the next big financial opportunity and more like the next big financial liability. Hence the recent move towards the door by more sophisticated investors who have seen the writing on the wall. That could soon morph into a stampede.
All this suggests the era of high-flying stock prices is coming to an end, not least in the US, where Wall Street excesses tend to dominate global investor sentiment.
That, of course, will not be the end of the story. A stock market crash or slide does not only destroy paper wealth, it also curbs consumer spending and capital investment ability, whether the collapse is in stocks, bonds, real estate or other asset classes. People feel less wealthy when asset prices decline. They spend less and save or hoard more. That in turn translates into less willingness to invest in the future, whether in AI or elsewhere.
The next market crash will almost certainly not be the last. A recent paper from the Bank for International Settlements in Switzerland casts an interesting light on boom-and-bust episodes.
It argues that “the Achilles’ heel of the international monetary and financial system is that it amplifies the ‘excess financial elasticity’ of domestic policy regimes, i.e. it exacerbates their inability to prevent the build-up of financial imbalances, or outsize financial cycles, that lead to serious financial crises and macroeconomic dislocations”.
Will it take another financial crash to motivate a move towards enlightened policies? Past experience with financial booms and busts suggests it will, even as the plunge in tech stock valuations suggests it may be too late to prevent a crash. Sadly, the “cult of equity” still has too many followers, especially in the US.
