The initial launch of ChatGPT just one year ago paved the way for a generative AI boom that’s continued to captivate a vast array of industries around the world. With more firms seeking to embrace this next generation of AI, some market commentators are gaining a sense of déjà vu.
This widespread clamoring to embrace generative AI draws parallels to the dotcom boom at the turn of the 21st Century. With ChatGPT users recently dropping for the
"I think this will be the biggest bubble of all time,"
\Mostaque’s views were echoed by James Penny, Chief Investment Officer of TAM Asset Management, in a recent Bloomberg interview.
"Companies that even mention the word AI in their earnings are seeing boosts to their share price, and that smells very much like the dot-com era,"
Generative AI has certainly become the word of the year in terms of emerging technology, and stocks that possess varying forms of AI exposure have experienced significant growth throughout 2023.
One of the biggest beneficiaries of the rise of generative AI on Wall Street has been NVIDIA, which recently attained a market capitalization of
“The company is growing rapidly and is well-positioned to benefit from the development of artificial intelligence (AI), metaverse, and other new technologies,” explains Maxim Manturov, head of investment research at
“Factors such as generative artificial intelligence and the metaverse may provide NVIDIA with a FAANG level of popularity. Generative artificial intelligence is a rapidly growing field that has the potential to revolutionize many industries,” Manturov added.
As well as its position as a market leader in providing the hardware that can power generative AI services, NVIDIA also moved quickly in embracing the technology. In March 2023, the company
So, should NVIDIA and Wall Street’s other key players fear an AI bubble that’s destined to burst? Evidence suggests that the rise of generative AI could be powerful enough to transcend the hype of the dot-com bubble.
Tangible Signs of Growth
While the dotcom boom saw hype swell to the point where stock values became no longer sustainable, there’s much about the excitement for AI that appears to be far more tangible.
Crucially, circumstances surrounding tech markets are fundamentally different from the turn of the century, and many Wall Street firms have been reacting to widespread investor sell-offs throughout 2022, punctuated by high inflation and rising interest rates.
As Financial Times columnist
The potential of generative AI could transform how the economy works on a fundamental level, which can see significant and positive change throughout a vast range of industries that transcends the potential of the dotcom boom some 25 years ago, with more people investing in it.
According to investment advisory firm
The firm’s analysis of key factors that can indicate a bubble, such as the emergence of irrational exuberance, high valuation, weak stock fundamentals, growing IPO volumes, and the rise of baseless market narratives suggests that a bubble for generative AI is not currently in play.
Although this doesn’t necessarily mean that generative AI is immune to becoming a bubble in the future, we’re seeing many signs of tangible growth and industry adoption that point to a technology that has the power to disrupt the vast majority of sectors.
The Rise and Rise of Generative AI Use Cases
The clearest sign that generative AI isn’t in a bubble can be found in its rapidly growing set of use cases across different industries.
Recently, system software firm Workday announced that it will be launching its own AI marketplace in the first half of 2024, with partners like BetterUp, Paradox, Hiredscore, Techwolf, Accenture, and Amazon already signed up.
“The Workday AI Marketplace will enable our customers to harness the incredible amount of AI innovation happening today while at the same time give them the peace of mind in knowing that each solution is proven, trusted, and meets Workday’s stringent standards for responsible AI,”
“Combining the power of the Workday platform with some of the world’s most innovative AI native companies will give our customers a running start in building for the future.”
Just two days prior to Workday’s announcement came a similar news story from another software firm, SAP.
Rather than an AI marketplace, SAP opted to utilize generative AI to develop a Joule, natural-language co-pilot that’s designed to provide rich contextualized insights for businesses.
“By quickly sorting through and contextualizing data from multiple systems to surface smarter insights, Joule helps people get work done faster and drive better business outcomes in a secure, compliant way,”
Generative AI has even provided fresh opportunities in the world of social media, offering
These generative AI use cases illustrate that the technology isn’t just helping businesses modernize their processes; it’s showing that AI is adaptable enough to provide bespoke solutions to companies regardless of their sector or USP. It’s this flexibility and adaptability that makes generative AI a technological proposition without precedence.
Finding Sustainability in an Ageing Workforce
In a
Although there is plenty of fear among workers that generative AI may soon become intelligent enough to replace them entirely, it’s worth considering that artificial intelligence can be a sustainable solution in maintaining productivity for businesses that are seeing more employees reach retirement age without a large enough talent pool to recruit a replacement.
This makes AI’s rising use cases not only transformative but essential for businesses worldwide seeking productivity enhancements.
AI’s Big Bang
While falling numbers of ChatGPT users are worth monitoring, it’s more likely a sign of a maturing AI market. For many months, ChatGPT was the star of the generative AI boom, and its ability to generate richly detailed and accurate content from simple prompts provided a crucial novelty factor among curious users.
Now, as generative AI is beginning to permeate the world around us less than a year on from ChatGPT’s initial launch, this new technological frontier is less of a novelty and more of a necessity for growth.
With more varied and bespoke use cases emerging on quite literally a daily basis, the generative AI boom is shaping up to be more of a big bang and is more likely to complement future technological developments like 5G and the metaverse rather than be replaced by them.
While the danger of market hype can always lead to inflated prices, it’s clear that generative AI is a rare transformative technology that’s likely to change the world. With this in mind, the available evidence points to more of a boom than a bust.