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AI pessimism of the morning

2025-03-25 16:26:58.12269+01 by Dan Lyke 0 comments

Ed Zitron — The Phony Comforts of AI Optimism

American Prospect: Bubble Trouble

Venture capital (VC) funds, drunk on a decade of “growth at all costs,” have poured about $200 billion into generative AI. Making matters worse, the stock market’s bull run is deeply dependent on the growth of the Big Tech companies fueling the AI bubble. In 2023, 71 percent of the total gains in the S&P 500 were attributable to the “Magnificent Seven”—Apple, Nvidia, Tesla, Alphabet, Meta, Amazon, and Microsoft—all of which are among the biggest spenders on AI. Just four—Microsoft, Alphabet, Amazon, and Meta—combined for $246 billion of capital expenditure in 2024 to support the AI build-out. Goldman Sachs expects Big Tech to spend over $1 trillion on chips and data centers to power AI over the next five years. Yet OpenAI, the current market leader, expects to lose $5 billion this year, and its annual losses to swell to $11 billion by 2026. If the AI bubble bursts, it not only threatens to wipe out VC firms in the Valley but also blow a gaping hole in the public markets and cause an economy-wide meltdown.

I especially like the ending observation of that one:

Maybe, after the fallout of the AI bubble is felt and the sun sets on Silicon Valley for a bit, the tech world can do a hard reset and return to its more innovative days again.

Via.

Edit: Alibaba’s Tsai Warns of ‘Bubble’ in AI Data Center Buildout

[ related topics: Apple Computer Interactive Drama Humor Books Microsoft Invention and Design moron Current Events Graphics Television Artificial Intelligence Economics Java ]

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