The notion that AI is the ultimate tech bubble, one to burst them all. According to experts Brent Goldfarb and David A. Kirsch, authors of "Bubbles and Crashes: The Boom and Bust of Technological Innovation", a reliable means of evaluating and understanding the AI mania involves applying their framework for determining whether a particular innovation leads to a bubble.
The framework considers four principal factors: (1) uncertainty, (2) pure plays, (3) novice investors, and (4) narratives around commercial innovations. Goldfarb and Kirsch identify and evaluate these factors and rank historical examples on a scale of 0 to 8—8 being the most likely to predict a bubble.
The application of this framework to generative AI reveals that it meets all four criteria: uncertainty is high due to the challenges in integrating AI into organizations; pure plays, such as Nvidia and OpenAI, dominate the market with their focus on building chips and AGI; novice investors, including retail traders on platforms like E-Trade and Robinhood, are pouring money into AI companies; and a compelling narrative, one of superintelligence and limitless possibilities, is driving investment.
Goldfarb notes that everyone is "something of a novice investor" when it comes to AI due to the new field and technology. He also highlights the power of coordinating narratives in inflating bubbles, as seen in aviation and broadcast radio history. The AI narrative, with its promises of curing cancer, automating jobs, and ushering in an age of superpowerful technology, is uniquely powerful in its bubble-inflating capacities.
The authors conclude that, yes, Goldfarb says, AI has all the hallmarks of a bubble. It hits all the right notes: uncertainty, pure plays, novice investors, and a great narrative. On their 0-to-8 scale, it's an 8—buyer beware.
Ultimately, as with any speculative market, there is always a risk that the promised benefits of AI may not materialize, leaving investors with significant losses.
The framework considers four principal factors: (1) uncertainty, (2) pure plays, (3) novice investors, and (4) narratives around commercial innovations. Goldfarb and Kirsch identify and evaluate these factors and rank historical examples on a scale of 0 to 8—8 being the most likely to predict a bubble.
The application of this framework to generative AI reveals that it meets all four criteria: uncertainty is high due to the challenges in integrating AI into organizations; pure plays, such as Nvidia and OpenAI, dominate the market with their focus on building chips and AGI; novice investors, including retail traders on platforms like E-Trade and Robinhood, are pouring money into AI companies; and a compelling narrative, one of superintelligence and limitless possibilities, is driving investment.
Goldfarb notes that everyone is "something of a novice investor" when it comes to AI due to the new field and technology. He also highlights the power of coordinating narratives in inflating bubbles, as seen in aviation and broadcast radio history. The AI narrative, with its promises of curing cancer, automating jobs, and ushering in an age of superpowerful technology, is uniquely powerful in its bubble-inflating capacities.
The authors conclude that, yes, Goldfarb says, AI has all the hallmarks of a bubble. It hits all the right notes: uncertainty, pure plays, novice investors, and a great narrative. On their 0-to-8 scale, it's an 8—buyer beware.
Ultimately, as with any speculative market, there is always a risk that the promised benefits of AI may not materialize, leaving investors with significant losses.
to me... everyone's jumping on the bandwagon and making outlandish claims about its capabilities 
it's like people are putting all their eggs in one basket and hoping for a superintelligent AI revolution 
but what if that doesn't happen? what if we just end up with more bureaucracy and regulatory issues around AI development 
. The more I read about it, the more I think Goldfarb and Kirsch are onto something. It's like when everyone gets caught up in the hype of new tech trends and suddenly everyone wants to be an expert investor 
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. We need to take a step back and wait for some of this dust to settle before we get too caught up in the hype.
... I mean, who doesn't want to believe in superintelligent machines solving all our problems? The narrative around AI is just too cool 
. And let's be real, Nvidia and OpenAI are innovators, not just trying to cash in on a fad. And novice investors? That's just the nature of tech investing - people get excited and throw their money at it 
!
. and btw is ai really gonna cure cancer? 
sounds too good to be true
i think they're right, we're living in crazy times where tech companies are getting more funding than ever and it's hard to keep track of what's real and what's hype. those pure plays like nvidia and openai are definitely dominating the market and investors are throwing money at them willy-nilly. 
meanwhile, i'm not so sure about this superintelligence thing... sounds like a bunch of marketing fluff to me 
It's like, what if none of this superintelligence stuff actually happens? What if we're just throwing money at empty promises like that was somehow going to make our lives better? 
The idea that everyone's some kind of novice investor when it comes to AI is laughable... we've been getting scammed by tech startups for years and now suddenly we're all experts? 
Give me a break. And don't even get me started on the narrative around commercial innovations... "curing cancer" anyone? 
It's like, chill out guys, we don't know what we're doing here... 
The narrative is just so compelling! 
But at the same time, I'm also thinking about how this could all go wrong... like when aviation or broadcast radio were super hyped and then crashed. 
but you know how that usually ends 
. But seriously, its like Goldfarb said, everyone's a novice investor when it comes to AI cuz its new & they dont know whats up 
. As Brent Goldfarb says, everyone is a novice investor when it comes to AI, and that's precisely why we need to be careful 
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. We need to be careful about getting caught up in the AI bubble and making sure we're prioritizing responsible innovation that benefits everyone 
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"Buyer beware" indeed... or should I say "Investor beware"... because let's be real, who hasn't invested in a startup and thought they were going to change the world 
. But hey, experts say it's an 8 on their bubble scale... that's a pretty strong bubble 
. Guess we'll just have to wait and see if AI delivers or fizzles out 
.
Anyway, I'm not saying we shouldn't invest in AI research, but we need to keep our eyes on the ground and be aware of how fast this tech is advancing 
. Maybe we should take a step back and assess what we really know about the tech... 
? Okay, okay, I get it... the experts say so 
. But, like, I'm also guilty of buying into the hype 
?
, but let's not get ahead of ourselves 
And now everyone's jumping on the AI bandwagon without even knowing what they're getting themselves into 
We should be cautious with our investments, you know?