As the AI bull run flags, do GenAI Cassandras deserve an ear?

Let’s analyse what AI ‘Cassandras,’ or soothsayers of a bleak future, have to say. While some of their concerns warrant attention, it’s crucial to understand what their assessments may be missing.

History seekers: Our first Cassandras are those who view everything through the lens of historical events, claiming, “This time isn’t different." They tend to weaponize narratives with seemingly irrefutable claims that often crumble upon scrutiny. 

They draw parallels between the GenAI boom and previous bubbles, predicting an inevitable bust. These experts will be right about price peaks in financial markets, but their analysis isn’t useful for the long-term path of a new technology.

Also read: The GenAI hype check is great news for artificial intelligence

Tech sceptics: These folks doubt any major technological leapfrog through GenAI. They focus obsessively on errors or what AI models still cannot do. These pessimists relish pronouncements like “machines can never develop consciousness." Their unfalsifiable claims about ill-defined terms distract from understanding real AI risks.

Heuristic methods, like those in quantum physics, deserve doubt. For AI transformers, it’s about how well they work. And, like quantum physics so far, they do work spectacularly. Yet, such validity is unpredictable. Potential risks must be acknowledged and addressed, such as the harmful effects of AI.

Sustainability warriors: Perhaps these are the most pertinent Cassandras, voicing GenAI’s environmental and societal impact. The energy consumption of AI models, their potential for job displacement and the ethical implications of AI-powered decision-making are concerns that demand careful consideration. Unfortunately, in a world of fierce tech rivalry, their voices stay in their echo chamber, with most real-life players paying mere lip service.

Killer-app hunters: They are the most vocal. They focus on the lack of meaningful revenue growth from AI products, accustomed as they are to financial upswells from new software advances. Despite booming data centres and cloud services, they are dismayed by portfolios that lack revenue drivers. 

A permanent power shift to non-application layers of technology seems to out such folks off. They not only predict a bubble, but see the current situation as one. And it is not just about stock prices, but about revenues within tech sub- segments.

Also read: All Generative AI output is essentially a hallucination

Historically, hardware players lacked pricing power and often had to sacrifice margins. However, they are learning to leverage their advantages in an era led by companies like Nvidia. The ‘killer app,’ once the holy grail of technology, may not exist in a world where application barriers fall, allowing data to converge and develop intelligence through language models.

But then, GenAI could deliver returns on investment without application-layer benefits. This could happen through driverless cars, new consumer gadgets, robotics, drug discovery and other use cases. 

This is not a given, but most businessmen and investors should be ready to evaluate potentially unthinkable business-moat shifts brought about by GenAI in contrast with the internet era.

Valuation concerned Cassandras: They worry about stock-market correction risks. GenAI stocks, which were outperforming other market darlings till recently, do bear high volatility risks, as they are the first to come under pressure on account of direct disappointments, even as they are susceptible to the usual economic, political and other factors that cause market falls, this week’s events being an example. 

Any cyclical slowdown or negative news from major players could make severe corrections worse than being witnessed now. But the best innovation stories are long-term. Interim market drops will have to be taken in our stride.

Embrace GenAI’s transformative potential: As we look ahead, the threat of a global economic downturn remains a real concern. Should a severe recession materialize, it could dampen worldwide consumption and corporate investment, potentially slowing the pace of innovation. AI, however, is unlikely to be knocked off its broad trajectory.

While Cassandras’ warnings remind us of the potential pitfalls of GenAI, one must separate those anxious about near-term stock prices from others worrying about cyclical risks, structural changes, and other societal or environmental issues. 

Also read: AI: Ticking time bomb? Can artificial intelligence stocks avoid a dot-com style crash?

Collectively also, we— including all Cassandras—should not take our eyes off GenAI’s immense promise. The technology is likely to revolutionize entire industries, improve lives and address some of humanity’s most pressing challenges. 

By acknowledging risks and addressing them proactively, we can harness the power of GenAI for the betterment of society. Let’s be clear. The future of GenAI is not predetermined; it’s up to us to ensure that the picture we create is one of progress, responsibility and shared prosperity by trying to understand the new technology for what it is.