By Brian Shilhavy

People are waking up now, as this is quickly becoming a huge story in the financial and economic news sectors, especially after Sam Altman has now admitted that there is an AI bubble.

From Financial Times (https://www.ft.com/content/33914f25-093c-4069-bb16-8626cfc15a51):

US tech stocks sold off on Tuesday as a wave of concerns that intense enthusiasm surrounding artificial intelligence could be overdone slammed into some of Wall Street’s most speculative companies.

The tech-heavy Nasdaq Composite closed down 1.4 per cent, with software group Palantir falling 9.4 per cent and chipmaker Arm Holdings shedding 5 per cent.

The decline marked the biggest one-day drop for the index since August 1. The blue-chip S&P 500 closed 0.7 per cent lower.

Traders pinned some of the decline on a report released late on Monday by a branch of the Massachusetts Institute of Technology in which researchers said that “95 per cent of organisations are getting zero return” from their investments in generative AI, the technology that has sent US stocks soaring to a series of record highs in recent months.

“The story is spooking people,” said one trader close to a multibillion-dollar US tech fund.

“Just 5 per cent of integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable [profit and loss] impact,” the MIT report said.

The stock drop also came days after OpenAI chief executive Sam Altman signalled that an AI bubble might be forming.

“Are investors over excited? My opinion is yes,” Altman told reporters this week.

He also said: “I do think some investors are likely to lose a lot of money, and I don’t want to minimise that, that sucks. There will be periods of irrational exuberance.”

Full article (https://www.ft.com/content/33914f25-093c-4069-bb16-8626cfc15a51).

[…]

Via https://www.ft.com/content/33914f25-093c-4069-bb16-8626cfc15a51