Imagine you’re living in 1990, using a dialup modem and an AOL disc to access the internet. (I can still hear that screech of connection in my head.) Some tech-hater you know tells you that email is cool, but the internet bulletin boards are as good as it will probably get.
Or you’re running an internet site in 1999 when the investment bubble bursts, and Wall Street analysts declare that internet companies are bad investments and might never turn profits.
Or you have a job with an artificial-intelligence company, and prognosticators at several publications assert that AI has reached its limits, or that its progress will slow. They insist that AI stock values are overhyped.
Which soothsayers would be most wrong? I’d pick the AI Negative Nellies. As someone who followed website growth for years, it was entertaining to see how wrong the predictions were in that arena. Those whot hink AI will hit the wall soon are destined to find out how wrong they are much sooner — a matter of a couple of years rather than decades.
Corporate investment in AI has dropped in some areas, largely because many companies are duplicating the efforts of other first-mover companies that have already superseded their capabilities, leaving the competition in the dust. From April through June this year stories about the 20% decline in year-over-year corporate AI investment began to crop up in tech and financial publications. What they didn’t explain is that a lot of companies hired AI novices or startups who wasted tremendous amounts of money on solutions that were obsolete before they completed them.
What I expect to happen, just as it did with the internet, is that truly unique startups that create value in their niches will be bought up by the big-name AI companies, which are well capitalized and well positioned to take advantage of their concepts. Others will invest in them (as Microsoft did in OpenAI) and leverage their investments to take advantage of advances. Some of the analysts hinted that this is AI’s “bubble” moment. Possibly. But the bubble hasn’t popped — it’s only slightly deflated.
A story on Techcrunch.com discussed this decline in funding and cited “a pair of recent surveys from Boston Consulting Group in which about half the respondents — all C-suite executives — said that they don’t expect generative AI to bring about substantial productivity gains and that they’re worried about the potential for mistakes and data compromises arising from generative AI-powered tools.”
Maybe they’re using the wrong products, or they haven’t figured out how to integrate them, but I predict that they’ll see it differently within a few years.
If I’ve learned anything about technology, it’s that the trajectory of new technology can be unpredictable. Monumental opportunity exists for small companies to become large companies. Some AI companies that don’t yet exist may grow exponentially, as Google, Amazon and Meta did in the internet space.
An annual report on the AI industry by Stanford University’s Institute for Human-Centered Artificial Intelligence notes that corporate investment actually reached its peak (so far) in 2021 at $337 billion. (This doesn’t include contracts with the US Department of Defense or venture-capital fund investments.) The report provides a lot of meaty insights into how AI is affecting the workplace by making people more efficient.
Despite a two-year drop, US investment in AI still far outpaced that of any other country last year. Newly funded AI companies totaled 897 compared to China’s 122. Not too shabby!
In any new industry, corrections will occur as clients understand which technologies they actually need and how they can best use them. When I was writing about the hospitality industry I saw dozens of tech companies with the latest room-booking engine or telephone system or internet provider fall by the wayside. It doesn’t surprise me that we’re already seeing winners and losers in the AI space. Stay tuned.
