AI Bubble is Dot-Com bubble’s twin

Recently, an official at one of the esteemed organisations called me for a meeting to demonstrate how impressed he was with the capabilities of the Artificial Intelligence (AI) and in specific, the sheer volume of Generative AI apps that he has reviewed and saved on his internet browser as a stack and ease of reference. Despite not being in a technology department, yet his knowledge and his usage of the various applications at his work place was very impressive to be honest. I personally have not come across the applications he uses, nor am I able to actually catch up with the huge number of applications that are launched periodically. Furthermore, I continue to have companies invite me to talk about and/or demonstrate their “new” AI applications that aim to solve various things in personal and professional lives. Majority of the solutions are either mockups, or soon-to-be-ready apps looking for funds and investors to help turn them into a working reality. I see a familiar pattern of a disaster that the world may be heading into. This week, my article will revolve around an AI Bubble. What is it and why it is important for you to know is what I will aim to briefly share.
Almost everyone in Oman (let aside the whole world) is speaking about AI. From chatbots writing emails to AI models generating artwork, videos, music and even full-fledged web and standalone applications. The rules of how we live and how we work is being rewritten to some extent and probably tomorrow, to a very large extent, thanks (or no thanks) to the progressive technology of AI. People say that are “Ai-Ready”. Companies on the other hand race to claim they are “AI-powered” and are investing heavily on AI solutions as part of their digital transformation efforts. I was personally requested to somehow introduce any AI initiative to one of the companies for the sake of them not to feel left out of the AI bandwagon. Investors, around the world, are putting a lot of money into virtually anything linked to AI and the soaring stock price of AI related companies in the stock market, is the proof in the pudding. I feel Deja-vu. History may be repeating itself with the dot-com bubble that witnessed massive financial losses for investors, with several high-profile tech companies losing over 80% of their market value back in 2000. The dot-com bubble was a stock market bubble that ballooned during the late 1990s and peaked on Friday, March 10, 2000. An AI Bubble may be the twin of Dot-Com bubble and may occur because of the hyperactive excitements we see all over the world due to the buzzing about Artificial Intelligence and the potential it holds for the future.
Briefly, an economic bubble happens when the price or valuation of an asset rises higher than its real value. The reason may be due to hype, speculation and fear of potential investors missing out. In a bubble, people invest not because of the actual returns it can expect soon (as traders do). People invest because they believe the future potential is limitless. Eventually, when reality doesn’t match the hype, the bubble bursts, leading to a sharp correction. For AI and looking at the situations today as I had indicated at the beginning of the article, a bubble may occur too, where many companies, products and investments may be overvalued compared to their real-world business potential.
Today, almost everyone (be it new companies or even well-established ones) is rushing to attach themselves to AI, in one way or another. New tools on a periodic basis continue to pop-up (appear) out of the blue moon flooding the market. Some do wonders, some are just proto-types and others are simply fake or even just a scam awaiting to lure users into the dark.
To conclude my article for this week, let me note that I am a technologist and by the same, anything to do about technology is something I am fond about. I am aware of the benefits that AI is bringing to the society, the business and the government as a whole. Yet, truth be told, AI in specific if not managed properly, would end up managing our entire lives in a catastrophic way. Let us embrace AI’s potential, but let us not be blinded by the hype, speculation and excitement without being critical of the same. Those who lived the dot-com era know what I mean when the technology eventually popped. Until we catch up again next week, stay safe.