And for reference, the two companies that stood out for non-AI capabilities made monitor stands.
This got me dwelling back into the post title, is this influx of AI tools going to be sustainable, or is there going to be an impending crash leaving only the ‘best and brightest’ on the other side?
- Everyone knew the Internet (and now AI) was going to be transformational.
- It was clear it would reshape economies and open up entirely new possibilities.
- But no one really knew what the killer use case would be, or how big any given Internet (now AI) business might get.
So, like a gold rush, huge amounts of money poured in, and everyone hoped their idea would turn into the next massive market.
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There’s also parallels between NVIDIA and Cisco.
When the Internet was in its infancy, Cisco stock soured because the thinking was that Cisco networking is what’s ultimately going to power the Internet. (Much like how NVIDIA powers AI).
But what happened was that, new networking companies entered the market and it was found that the Internet economics was so large it overshadowed the relatively small networking needed for it in comparison.
Take a look further back to the Personal Computer era in the 80's into early 90's. There were tons of PC makers out there, IBM became dominant but they haven't been in that business for a long time now. Microsoft was the enormous winner coming out of that.
When grandma starts talking about GPU's and NVIDIA stock, this AI bubble might be at its peak. I think if history rhymes with past lyrics (that whole history doesn't repeat but rhymes thing), its more likely that a software company (OpenAI, Google, Microsoft) is going to be the dominant player emerging from a potential bubble burst.
A potential pin-prick to the bubble (looking into my crystal ball): pricing for AI - once companies realize their runways are running out and they want to turn a profit of some kind to stakeholders they will need to raise prices to offset the energy and hardware build outs. Customers may realize they aren't getting the productivity to offset those increased costs and hold back budgets on AI spend. Or chip tariffs depending on TACO volatility.
I am still thinking and trying to figure out what the new concepts i.e social media, streaming, etc, of the AI era will be. There are of course the extrapolations of existing concepts, e.g shopping just like it adapted to the internet world will adapt to the AI world and you'll have a few companies there -- equivalents of uber, amazon, zomato, etc (or maybe those companies themselves).
Products with no margin such as translation will of course get a million times better, but I mean in terms of economic value.
But Amazon, Google, Tesla and to a lesser extent Microsoft are all creating their own chips to lessen their dependence on Nvidia
In reality most things go in an S curve and the excitement fades in a rather boring way. People were worried about bubbles in 2016, but they never really happened.
There was never a mobile bust, or a social bust, or a big data bust. These things just got boring after a while and the valuations stabilised. Sometimes companies went bust and sometimes they kept growing, but the super exponential growth in validation stopped. And we moved on to talking about the next thing.
We are currently in the early phase where people are creating code messes with little oversight and future people will be expected to build on them, which will either take expanded effort or complete re-writes from scratch.
The quality of all products will suffer for the foreseeable future.
It's now a several times a day occurrence for me of trying to help someone figure out a problem, and when I ask them why they did that, the answer is always that the AI told them to.
If the people that are using these tools don't know right from wrong, it's a recipe for disaster.
This problem is amplified in non-technical fields where people are creating tools for businesses without even the knowledge of what a code review is.
AI will be around forever, and the problems it will create are immeasurable, but unfortunately, it will likely always be seen as the solution to the problem as well.
The way it usually goes is that the prize goes to best real life application. It's not entirely clear what that is just yet. I was involved in web commerce in the 90s and there was a good bit of casting around looking for applications. And not really any mobile use, though I did a bit of that too. It's hard to visualise the future.
- Yes, I think people are already wary and have "AI fatigue" from all the chatbots and AI add-ons people have released over the past 2 years. It's already hard to convince people that your AI project isn't a wrapper flip.
- No, it's fundamentally useful in almost every industry, context, and environment.
Very similar to the 2000's internet on the one hand, and orders of magnitude more useful on the other. The difference that I see happening is like "AI literacy" taking over and thousands of failed startups getting immediately overrun by thousands of viable startups.
These days it seems even a significant porting of the general public is aware of the overhype. But back then internet wasn't much of a thing so information didn't spread as fast so I imagine a lot of people didn't even know there was a huge hype around the internet.
I started working in 1996. By 2001, I was making $70K. The company I worked for did bill printing for utility companies. To put that in perspective, I had my first house built in the suburbs for $175k. This was well within the rule of thumb of not spending more than 3.5x income for a house.
On the other hand, I didn’t have that much invested in the stock market. The entire dot com bust was a shrug and curiousity to me while it was happening.
On the other hand, the real estate crash in 2008…
While all of my latest projects (cloud consulting) have in some form another involved “AI”, they are really just AWS API calls that are much easier using Gen AI LLMs. But could have been done with much more development and training of ML models before.
When the AI bust happens, it will have the same affect on me - none. Until businesses stop needing people who know how to translate the latest tech into business value, my career is safe.
Everyone knew there was this thing called the internet because cable broadband was being deployed everywhere and being sold for less than cost. That company whose name I couldn’t remember went bust I think around 2003(?) and I think AT&T took them over and doubled the price.
I remember someone showing me that you could do to domino’s pizza website and get a free pizza (unlimited orders) just for going to their website. I think that was 2002-3(?). There were lost of giveaways during that era. It all came to a stop as the internet grew and costs pilled up more so than the dot com bust.
I worked at a small investment firm in college during the time and I remember the portfolio manager doing the portfolio allocation for a retirement plan. Randomly picking Janus mutual funds in the hall right before he went to lunch.
I remember the secretary complaining in December 1999 how she knew a secretary at another firm that got rich from an IPO.
There has just never been a level a speculation like in late 1999 that I have ever experienced. This was over geocities level webpages on dial up modems with almost no business plans to even make money.
OTOH, I remember being in SF in spring 2001 for Embedded Systems Conference and overhearing a couple of Web developers on the same bus talking about how everyone they knew was losing their jobs. So I guess by that time, the end was in sight! Our bonuses continued for at least a year after that.
A lot of late 90s to early 2000s hype has come true. Today we have substantial companies with no physical office and that have never used physical mail, delivery for everything, and ubiquitous connectivity for devices. It just took about 15-20 more years to get there.
I suspect we will have AI replacing programmers on non-trivial and non-slop projects in 15-20 years.
The social optimism of the late 90s and 2000s about the Internet was mostly wrong though. We didn’t really anticipate either surveillance capitalism or mass disinformation breaking whole segments of the population off from reality. Like most well intentioned people we had trouble even imagining the uses that “dark triad” personality types would have for the technology.
The pessimism around AI is, I think, an overcorrection from the excessive optimism around the net and the web.
Now there are n use cases (10 <= n <= 50?). There is no real moat.
What we don't know is, if there will be significant advances, and how useful they will be. But we also don't know that for any other area.
What we do know however is that breakthroughs are rare.
Everybody is now in the hype train. AI here, AI there. I find most of it just annoying.
My guess is this that a reckoning is more probable than the new super feature.
From an employees standpoint, most of the employers weren’t profitable and when they went out of business, employees weren’t having a hard time finding a job.
But honestly, it was only people working for “tech” companies. I was working in Atlanta as a Windows developer with four years of experience working for a boring old bill printing company. Other profitable enterprise companies were still hiring like banks, insurance companies, airlines, etc.
Today, all of the major tech employer’s are trillion dollar profitable companies with real businesses that are not dependent on Gen AI. They have been using machine learning forever and still will.
Every company doesn’t need to be a software development shop. But every company doesn’t need to be into data analytics.
On the other hand, from the investor’s standpoint, the only publicly traded company that will live or die by AI is Nvidia - and Tesla which has always been a meme stock. If investor money is lost in the private market, who cares?
Yes I know that there is a push to allow private equity investing in 401K plans and pensions. I really only have sympathy for pension fund holders who don’t have a choice.
People were cautious after dot com. Then they got greedy with FAANG. Even greedier with crypto. Crypto proved that markets didn't really matter.
AI actually has some basis, but some of it is being measured to crypto standards. Not to mention it was already overinvested 10 years ago when everyone was calling it "machine learning", and yet the numbers kept going up.
Sometimes prices are just high though. Bubbles happen when someone is trying to sell it to another sucker, who's trying to sell it to another sucker. We don't see a lot of "sucker" language going around with AI yet. When it happens, people will advertise it as a great investment, like they did with NFT and real estate near the bubbles.
If the two graphs so far look the same you have your answer. Ultimately this will not be a finance problem but a market and behavior problem. People are predictable with confidence.
Other sectors that people today find is boring will have an upswing.
The biggest risk for any startup is they depend on the core model developers, who are wisening up and designing their own tools to undercut those who just call their API's.
I think its better to describe AI as a big shake up. Like a Cambrian explosion of sorts.
We will see tons of bankruptcies, in both AI and not AI companies. A ton of low profile ones and likely many high profile ones. It's just the nature of it.
/s maybe
Year on year people will be disappointed that AI isn't consistently improving and that it will eventually plateau, and other things will be hyped up excessively.
I can imagine quantum being the next big craze but at the same time, I doubt that can even get to consumer considering it needs near 0 kelvin temperatures.
But who knows
