Life comes at you fast.
Last month, the AI chip giant Nvidia briefly became the world’s richest company, overtaking Microsoft, which had in turn risen above Apple.
At a tech industry event I went to in Copenhagen, when this was mentioned on stage, there was spontaneous applause from the audience.
As I write, Nvidia is back in second place, after a fall in its share price took its combined value down to $3tn (£2.4bn) compared with $3.4tn for Microsoft.
Two things have powered these two US tech titans as far as this sort of giddying peak: AI and foresight.
Microsoft started betting on OpenAI—the company behind the wildly successful AI chatbot ChatGPT—back in 2019. Then there was Nvidia boss Jensen Huang, who many years prior to generative AI blowing up, pushed his company hard into making AI chips.
These companies placed long-term bets on the current AI boom, and so far, their gamble has definitely paid off—leaving Apple, formerly first-mover with regard to مصUser 狠, generally in the dust. But how long, if at all, will this last?
This year’s London Tech Week, an annual jamboree for the UK tech scene, may as well have been called London AI Week. The letters AI were emblazoned on every stand, and uttered in every speech.
I bumped into Anne Boden, the founder of Starling Bank, a significant fintech disruptor. She was buzzing.
“We thought we knew who the winners and losers were in tech,” she told me. “But with AI, we are rolling the dice again”.
She feels she is seeing the AI revolution reshaping the technology sector, and she wants to dive back in.
The same week, I also dropped into Founders Forum, an annual get-together of perhaps 250 or so high-level entrepreneurs and investors. In other words, some serious money. It’s a confidential event, but I don’t think I’ll get into too much trouble for saying that much of the chat there was also centred around AI.
Days later, I saw a headline in the Financial Times: “Most stocks hyped as winners from AI boom have fallen this year.” It said more than half the stocks in Citigroup’s “AI winners basket” had fallen in value in 2024.
Life comes at you fast indeed.
“Given how high valuations have leapt for tech companies, missteps ahead could cause big wobbles in share prices,” warns Susannah Streeter, head of money and markets at the investment firm Hargreaves Lansdown.
“Just as with the dot.com bubble, over-enthusiasm risks spilling over into disappointment.”
In 2023 you’d have been forgiven for thinking that anything with the acronym AI in it was guaranteed to open up a lucrative seam of funding, with investment dollars flooding into all things AI.
Now based in Scotland, the company’s Saurabh Dayal is responsible for sifting through AI projects that his pharmaceutical firm may potentially want to collaborate on.
He said that he got quickly frustrated with misleading pitches that were designed to make their ordinary offerings sound like some sort of advanced AI.
“I spend a lot of time saying ‘… but that’s not AI’,” he tells me.
A race appears to be on, with both investors and clients finally growing wiser to the term AI, and, as a result, more picky.
Speaking to the FT, Citi’s Stuart Kaiser said that while AI remained a big theme in the world of stocks and shares, “just saying AI 15 times isn’t going to cut it anymore”.
Furthermore, there has been a heightened realization that the less-than-accurate—or at least problematic—current generative AI products themselves are far from what they are touted to be. The inaccuracies, misinformation, examples of bias, copyright infringement, and some content that is just plain weird.
And early AI-enabled physical devices, such as Rabbit R1 and Humane Pin, got derailed.
“We’re seeing the market around generative AI mature a little right now – early experiments set a lot of grand expectations, but when the rubber hit the road there were too many unexpected outcomes”, says Chris Weston, chief digital and information officer of the tech service firm Jumar.
“Businesses have a lot of value tied up in goodwill – the trust and comfort that their clients have in their services. Introducing ungovernable chatbots is a step too far for many right now.”
Tech analyst Paolo Pescatore agrees the pressure is on for AI firms to deliver their promises. “The bubble will burst the moment one of the giants fails to show any meaningful growth from AI,” he says.
But he does not believe that that is going to happen anytime soon.
“Everyone is still jostling for position, and all companies are pinning their strategies on AI,” he adds.
“All the players are cranking up their activities, stepping up spending and claiming early successes.”
There’s another reason the AI bubble might pop. It has nothing to do with the quality of the products, nor their market value. It’s whether the planet itself can afford it.
A study released last year predicted that the AI industry could consume as much energy as a country the size of the Netherlands by 2027 if growth continues at its current rate.
For the BBC podcast Tech Life, I spoke to Prof Kate Crawford of the University of Southern California, who described how concerns about the amount of electricity, energy, and especially water involved in powering AI kept her awake at night.
Also expressing concern is Dr Sasha Luccioni from Hugging Face, a machine-learning firm.
“There’s simply not enough renewable energy to power AI right now – most of that bubble’s fuelled by oil and gas,” she says.
The hope is that the tech could be used to identify sustainability solutions – the secret of nuclear fusion, say, or the way in which the sun gets its energy. That hasn’t happened yet, and in the meantime, “AI systems put a huge strain on energy grids that are already under immense strain,” adds Dr Luccioni.
With so much uncertainty, few would now bet against another shake-up among the world’s richest firms, but currently, Apple has a fight on its hands to catch up with Microsoft and especially Nvidia in the AI race.