AI, the bubble, and the danger of excessive expectations
Many analysts see similarities between the boom in artificial intelligence (AI) investments and what happened in 2000 with the .comAfter a period of euphoria and rising prices, the bubble burst. .comThese were the years when the internet was becoming increasingly popular. Companies received millions in stock market investments without it being clear whether they would ultimately reap the expected profits. Many disappeared when the bubble burst, when expectations spiraled out of control and a recession hit, bringing things back down to earth. Others, like Amazon or eBay, for example, after a period of losses, ended up becoming tech giants. Now many analysts see parallels. And with the fear that, in the event of a crisis, the economic impact will be much greater than before. In fact, just one of the companies involved, Nvidia, is worth on the stock market today the equivalent of everything that was lost in that crisis.
It is significant, for example, that an influential investor, Michael Burry, famous for predicting the mortgage crisis subprime, has announced that it is betting against two of the giants of the sector: Nvidia, leader in chips for generative AI, which exceeded five trillion in market value (although it is now slightly below), and Palantir, specializing in software for big dataAnd others, like OpenAI, the creator of ChatGPT, which plans to go public, have hinted that they might need government support to win the race in China.
Analysts are convinced that these companies are overvalued and that, therefore, any rumor or discovery of cheaper and more efficient technologies could burst the bubble. This is due more to excessive expectations than a lack of technological potential, as often happens in the stock market. Possibly, as happened with the internet, this will not represent a setback in the implementation of AI, which is on track to be even more disruptive than the internet in our lives. But it does raise many questions about who controls AI, how it is being managed, who is investing, and who will benefit.
The fact that large technology companies are more powerful than many countries is worrying. This is especially true considering their tendency towards concentration and oligopolies, with private and opaque governance, even though it affects everyone's daily lives. In the midst of COP30, it is also necessary to remember the enormous energy and water consumption of the data centers needed to run AI, despite advances in efficiency. And also, the widespread plundering of information and data that they collect without any compensation from millions of sources. The EU is the world's leading authority in regulating the activities of these large technology companies, but, conversely, it has practically no regulations of its own and, therefore, its ability to exert pressure is limited by its dependence. Their power lies in data, and they must know how to put a price on it.
The race today is between China and the United States, similar to the one that took astronauts to the Moon, but with effects that could change the way we live. That is why it is important to have more transparency and democratic control over how and for what purpose this data is used.