Has the AI Hype Bubble Begun?
As OpenAI’s ChatGPT chatbot skyrocketed to become the fastest-growing consumer app ever, tech giants unleashed a spending spree, aiming to capitalize on the impending AI revolution or avoid getting disrupted by it. Despite worries on Wall Street about an AI bubble or exaggerated promises, tech luminaries and veterans of past technological upheavals have weighed in. Visionaries like Peter Thiel, Bill Gates, and Elon Musk have joined the chorus, echoing the collective sentiment that the AI fervor is authentic.
“The world’s first trillionaires will be those who master AI and its extensions in novel ways we haven’t fathomed.” ~ Mark Cuban
The Big 7’s AI Spending Splurge
The “Magnificent Seven” tech stocks have outperformed the broader market in terms of earnings growth and stock valuations. The triumph of America’s tech titans has led to substantial cash reserves. Yet, the CEOs of these giants are not pausing in anticipation of the next revolutionary wave. Amazon, Alphabet, Meta Platforms, and Microsoft escalated their AI investments significantly, injecting a staggering $100 billion in the first half of 2024 alone — nearly a 50% surge compared to 2023. With scant revenue to showcase for this spending spree, analysts are questioning if a slowdown looms, potentially triggering an AI stock market correction.
Jensen Huang Affirms Blackwell Demand
For a pulse on the situation, none surpasses Nvidia, the undisputed AI forerunner. In a recent TV appearance, CEO Jensen Huang addressed concerns, updating investors on Blackwell — Nvidia’s cutting-edge, top-tier chip. Huang divulged that the demand for Blackwell is off the charts and revealed that the chip is now in full production following a brief delay attributed to Nvidia’s supplier, Taiwan Semiconductor.
Accenture Strikes a Historic Deal with Nvidia
Jensen Huang’s TV appearance aimed at spotlighting the company’s partnership with consulting powerhouse Accenture. The deal will see Accenture harness Nvidia’s AI suite to amplify its AI applications, trigger innovation, enhance efficiency, and slash costs.
OpenAI’s Valuation Surges to $150 Billion
In a groundbreaking move, OpenAI transitioned from a non-profit entity to a for-profit business. Subsequently, the company announced a successful funding round that pegged its valuation at a staggering $150 billion. Ark Invest, spearheaded by Cathie Wood, a known disruptor investor, plowed $250 million into OpenAI. Wood’s recent data illustrates that expansive language models such as ChatGPT, Claude, Perplexity, and Bing may be encroaching on Google’s dominant search engine share.
Final Take
While concerns loom over a potential downturn in AI spending euphoria on Wall Street, Nvidia’s report of “insane demand” for Blackwell chips and OpenAI’s stratospheric valuation underscore that the AI investment boom is unlikely to fade anytime soon.