Some Experts Say AI Headed for a Financial ‘Crash’ of Sorts

You may remember the dot.com internet ‘bubble’ that burst in the year 2000, causing thousands of internet companies, search engines and other tech startups to go bankruptc.  Now, growing numbers of experts are warning the pursuit of AI could do the same.

   What Is A ‘Bubble’ In the Economy?

Simply, a bubble occurs when massive growth and development happens in an industry or sector of the economy, attracting billions of investment dollars from a wide variety of sources.  In the late 1990’s massive growth and development of the internet created a stock market bubble. Stock prices expand, much like a bubble.  But bubbles can and do pop.

If these companies do not turn an acceptable profit or begin to lose money, stockholders often abandon them, and they crash economically.  When stock value outpaces actual profit, then things turn bad. Amazon lost 90 percent of its value in the dot.com crash, but survived.

Some of the companies who didn’t survive the dot.com crash you may remember included pets.com, eToys.com (an online toy seller), Webvan-an online grocery retailer, and telecommunications giant WorldCom...they all collapsed.

Now, Experts Warn About Massive AI Development–and Data Centers

Billions are being poured into developing and building data centers, designed to house the massive computer libraries needed to supply Artificial Intelligence. While AI has led to a lot of breakthroughs in many areas, the tech itself has not necessarily ‘turned a profit.’

  Last October, The Hill online explored potential warnings from major tech and finance leaders who said the massive AI investment boom reminds them of the dot.com period of the late 90’s.  The key, they say, is whether down the road these AI investments actually result in profits and value being generated from the funding.

Meta (Facebook-Instagram), Amazon, and others have plowed billions into AI research.

 Jeff Brown of Brownstone Research, several years ago predicted this AI Boom.  A growing number of experts question whether AI is generating enough revenue to match all the business and tech hype. Some wonder how long it will be before investors  get impaitient, and walk away or pull back their AI investing.

Most agree, only time will tell.  Some say the developments and advancements gained from AI will make it worthwhile in the end, but many are keeping a close eye to see if history repeats itself (like 2000).