Apollo calls AI a 'bubble' worse than even the dotcom era

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I think its a bubble but the numbers companies like nvidia are putting up right now are no lie, and from tech companies perspectives its better to invest in a potential trend than to sit on the sidelines, which is why everyone continues to buy GPUs and launch their own AI enabled products in hopes of catching this wave.<p>However, ML&#x2F;AI has always been a cornerstone of most big tech companies, but it was usually in understated products or used in ways that might not be directly b2c or b2b like ChatGPT. For example, meta&#x2F;google&#x2F;netflix ad&#x2F;video recommendation systems are likely mostly ML based, and have been for a few years. Most of the photography on your phone is using some form of CV&#x2F;ML, Amazon probably uses ML for logistics planning, AV companies have been using ML models in perception and behvaior for years, generative models have existed for a while, etc.<p>ChatGPT just brought the idea of AI and ML to the forefront of investors and the general public as a &quot;tangible&quot; and fairly practical use of &quot;AI.&quot; So I don&#x27;t think AI is necessarily a &quot;bubble&quot; since theres potential for pretty high utility products, but I do think the market might have an overly optimistic view on the success of AI (specifically generative AI) monetization, which only a few companies have arguably successfuly done (mostly the AI &quot;suppliers&quot; like nvidia, OpenAI, etc). Its yet to be seen how Chatbots&#x2F;generative models will actually impact the bottom line or streamline processes at businesses without necessarily &quot;solving&quot; AGI.<p>ML&#x2F;AI existed before this &quot;bubble&quot; and will continue to exist after. In my opinion it was only a matter of time before we got here, though I&#x27;m not sure if this time if its over or under priced. I disagree with the claim that AI itself is a bubble, since it has actual utility.

Even if GPT4 progresses no further, it still would justify the investment IMO. This is the first truly useful and novel tech to come out in a long, long time. Something that delivers magic not just in rigged demos, appreciably moves the productivity needle, and makes intellectual work more bearable, at least for me. If this is a “bubble”, it’s at least a useful one.

Someone who invested their money in a Nasdaq 100 certificate on top of the &quot;dotcom bubble&quot; is today 4x better off than someone who held USD.<p>Someone who invested their money in Amazon on top of the &quot;dotcom bubble&quot; is today 50x times better off than someone who held USD.

i think it’s worth noting that the technological innovation driving the dot-bomb years was… the internet. (please, let’s not get into the weeds on monetary policy, bad investments, etc)<p>yes, there were lots and lots of companies started with bad ideas, ideas way ahead of their time, and even good ideas that just didn’t get traction for whatever reason. but the thing underlying all of it was basically just the availability of this amorphous thing called the internet that had been around for a while, but not generally accessible to the average person. Now all of a sudden anybody and everybody had an email address and could get on the web and order pet food from the comfort of their own home. There was a lot of time and money spent trying to figure out what to do with all of those new possibilities. but I don’t think anyone argues that the Internet in general or the web specifically were revolutionary innovations.<p>AI is much the same. Everyone still figuring out what to do with it how it’s going to affect the economy, jobs, the tools we use, even the kinds of entertainment we seek. Is there a bubble around it? sure, almost certainly. does that make it itself worthless or transient? Absolutely not. and just as we had some companies come out of the Internet bubble like Amazon, they are going to be some long lived companies that come out of the AI bubble. I think trying to pick exactly which ones are going to be winners and losers is a very tricky game though.

These are uncharted territories for sure. I’m not sure if it’s a bubble though. The valuations, even though gobsmacking and ridiculous, are grounded in some reality.<p>For example, Nvidia’s PE ratio has actually improved. The stock is technically cheaper now than it was before. Assuming of course that it is able to keep performing at the same level. Something I am hugely skeptical about that.<p>I have a working theory (unfinished and likely has faults): The automation of decision making in trading is the reason behind this. Which is also why I feel a repeat of 2000 will be unlikely as fewer humans are involved directly in the loop. Things are going to seem more plausible now, as the algorithms ensure that by looking at hundreds of signals before making buy&#x2F;sell decisions. Our guts may be picking up on something uncanny that has not been accounted for in the algorithms yet. Only time will tell what that is.

The vibe I get from talking to my CTO and other C-suites who do nothing but talk about AI incessantly is that all the other C-suite buddies of theirs are saying &quot;This AI thing is really blowing up, we need to jump on that!!!&quot;, which then means they dedicate entire teams to making some shitty chatbot or whatever so that they can slap the &quot;AI&quot; label somewhere on the marketing page.<p>No shits are given for actual usefulness or if it even makes any sense for the product at hand to <i>have</i> some sort of LLM functionality built into it. Why would they care? Their investors want AI, so AI we build.<p>An absolute circus

Survivorship bias is huge in all &quot;but I made 50x&quot; because in order to do this, you have to have not selected the 100 other AI projects which tanked, along the way. And by the time there is 1 clear leader, you can&#x27;t stonks on it because the price rose for the ones who got in before you.<p>Looking backwards saying &quot;but this guy I know did 100x&quot; is not informing of how people can know now, that Amazon and not Alexa by Digital is the one to pick. (note: they are just labels, alexa was not an amazon competitor. the point is digital was acquired, and died. Amazon didn&#x27;t die. At the time digital was big, you would think it was a sure fire bet. It wasn&#x27;t)

There were plenty of dotcom-era companies that went bust when the bubble popped but the economy still became entirely and permanently grounded in the internet. AI will be the same. The bubble may eventually pop and there are many &quot;Pets.com&quot;-esque LLM chatbot wrappers that will go under. But ML&#x2F;AI is going to be just as big of a foundation of the future economy as the internet is, even after the culling.

There&#x27;s a lot of shitty products with an AI label stapled on, either based on using OpenAI API without a clear articulation of value of feasibility, or by training hopelessly limp models with all the wrong assumptions, bad or insufficient data and no real validation. But that&#x27;s how the game is played and everyone knows that. If only a few of those companies succeed beyond any dreams, that will be enough.

I get very little spam mail. So, when I recently started to get some random invitations to webinars related to “adding” AI features to products, I have shed any doubt on whether this is a bubble. (First because they call it “AI”—it’s ML, of course; second because it’s cold mass mail, there’s obviously not enough actual demand if they resort to dipping into spam databases—that speaks volumes.)

It feels like AI is becoming a buzzword more and more divorced from its original meaning. Your car&#x27;s automatic transmission would count as AI according to some of the colloquial uses I&#x27;ve seen.

It all depends on whether fortune 500 can improve their business processes using AI. It seems like it is able to do so, which translates to vast numbers of AI chips being sold in the next 1-5 years.

There&#x27;s the macroeconomic and the narrower view.<p>The narrower view in the context of artificial neural networks (&quot;AI&quot; is more of a bubble term. Even artificial neural networks might be a bit of a bubble term, as if we have completely recreated the human nervous system in the computer). Have they made advances in recent years, will they have profitable products with some development? Probably. They&#x27;re a new technology which will almost certainly be profitable, just like the technologies in 1994 that made the current Internet profitable. It is of a certain size though.<p>Then there&#x27;s the macroeconomic view. There is a lot of capital sloshing around looking for a decent return. The common sense thing in a sense would be to slowly finance &quot;AI&quot; and as it develops, put more and more money in. But there&#x27;s few decent things to get a good return on, &quot;AI&quot; is obviously one of them, so a ton of money rushes in. More money than is needed at the moment, and ahead of schedule as more things are needed in the development of all of this (including more powerful Nvidia cards and Nvidia networks, more robust frameworks for Pytorch and such, more Phd&#x27;s who know what neural network is needed for a problem and data engineers to move data around).<p>Fed Chairman Greenspan talked about &quot;irrational exuberance&quot; in 1996, and yet the dot-com bull run (if Netscape&#x27;s IPO was the sign of it really starting) had barely even started yet, and ran on until early 2000.<p>It&#x27;s true if people are handing money out left and right, carnies will show up to pull in that money. This really doesn&#x27;t have much to do with the people who were developing the technology of the Internet or &quot;AI&quot; now. There&#x27;s a ton of capital sloshing around looking for good returns, it&#x27;s obvious &quot;AI&quot; will be a future source of profitable returns, so money comes pouring in, even if it is disruptive to a point. It&#x27;s not just the carnies pulling in money, it&#x27;s the situation of a massive amount of capital desperately looking for better returns then it has been getting.

Cathy was lucky, now salty because she sold too soon, she has to act her part for her image. During covid, she hyped loads of crap companies &quot;pump and dump&quot; style using social media, defrauding retail investors, now she is pretending to play hero again.

I think there is a disconnect between what Gen AI can do for businesses and what businesses think Gen AI can do for them.

Have we already forgotten about crypto?

Silicon is the new gasoline and AI is the Ford Model T.<p>Except, AI is much easier for new players to enter and manufacture than the Model T ever was. We&#x27;ve already seen this with the fearsome market pressure people are putting on the current market leader, OpenAI, despite their sizeable first mover advantage.<p>In that sense, and only in that sense, do I think AI is a &quot;bubble&quot;. Prices are going to fall very quickly as this technology weaves its way into every firm imaginable. Everyone else who finds a way to put AI to use productively moving atoms around, meanwhile, really will see their stock valuations explode.

Agreed, every company, from non-profits to startups to corporations of every size seems desperate to capitalize on AI. It doesn&#x27;t matter whether or not it makes sense to incorporate in their product, say AI and the stonk goes up, so we need to pump AI into everything. Which usually means tacking on some stupid text summarization or ChatGPT interface everywhere. There is no way there is any demand for this shit, and it&#x27;s already causing problems due to hallucinations. I don&#x27;t know how much valuations are inflated due to the more AI == more money insanity, but it&#x27;s definitely worse than crypto, not every company in existence jumped on that train and there was always some healthy amount of skepticism around that tech.

The trick then is to time the selling ...

Sora is real. GPT-4-base is real. Entire career groups did not stage unprecedented coordinated strikes and governments did not issue new export controls in the dotcom bubble.

There were a lot of people in 2000 who didn&#x27;t understand the internet, much less how to make money with it. The future of the internet was much less clear. Once everyone is online, then what? This uncertainty caused people to gamble on internet stocks, because you never know...<p>Many people don&#x27;t understand AI, but it is much more clear that it is a useful tool. Companies can make money with it by replacing workers and increasing the productivity of workers who know how to use it. The future of AI is much clearer as well. We know it&#x27;s going to keep getting better. There is no limit that we know of on how good it can get. Feed it a script and make full length movies? That might happen. AI companions and care-givers for the elderly? Definitely. An AGI companion that serves as your assistant? That&#x27;s not far off. AI psychotherapists? We&#x27;re almost there. The possibilities are endless.<p>This is the difference as I see it.

The same thing was said about housing, the internet, blockchain, etc.<p>Meanwhile most people are sitting on the side line paying rent and hoping to be able to pay it next month…

So I guess that means the winners that emerge will be quadrillion dollar market cap companies instead of only trillion market cap like with dotcom.

A bubble for investors just means they&#x27;re anticipating more returns than will be possible to recoup.<p>But that&#x27;s only matters to investors.<p>Something could break one or two major assumptions undergirding the current form of capitalism, but if it caused the returns to evaporate, that would still look like a bubble to an investor. But capitalism would have changed, and it would still have been hugely impactful for regular people

AI is a bubble, or Nvidia is?

I disagree, there is so much to build on from here.<p>I also feel the same way about Apple Vision Pro.

How was dotcom era a bubble? Sure Webvan went out of business, but Instacart is huge. The very first company trying something out not succeeding is not a bust, it&#x27;s normal risk of early movers. 3D TV seems to be a true bubble so far, I don&#x27;t know if AI is. I have to think that applications like self driving cars and further automation of manufacturing are here to stay, while chatbots might be a fad, we will see.