A Tale of 3 Bubbles
A recent CNN article, among many others recently suggests we are in a hype bubble with AI. Nvidia, the leading AI chip producer, reported a stellar second-quarter performance with sales rising 122% and profits doubling. Despite this, Nvidia's shares fell by 7%, which reflects more on Wall Street's expectations than the company's performance. Nvidia's stock has surged by about 3,000% over the past five years, driven by the AI hype that has taken over the investment world. Wall Street's excitement about AI has fueled Nvidia's rise to a $3 trillion valuation, putting it among the world's most valuable companies.
However, as Nvidia consistently exceeds expectations, the market has become desensitized to its impressive results, leading to a sense of anticlimax after its latest earnings report. Additionally, there is growing skepticism about the real value and revenue potential of AI technologies, as many tech companies have yet to demonstrate significant returns on their AI investments. While some believe the AI hype might be a bubble, Nvidia is well-positioned as its chips are integral to a wide range of applications beyond AI chatbots, including ad-targeting systems, search engines, and robotics.
Counterpoint
Some say we are on the “Peak of Inflated Expectations” and headed for the “Trough of Disillusionment. (Gartner’s Hype Cycle).” We are not in an AI bubble because the applications of AI have become ubiquitous across various industries and are deeply integrated into everyday processes. The skepticism about AI’s financial returns and the potential for an AI bubble is understandable, especially when viewed through the lens of overhyped expectations. However, unlike past technology bubbles, AI has already demonstrated its value and practicality across numerous sectors. Granted, Big tech has yet to make a profit, but AI consultants are cleaning up.
AI is not a speculative trend; it is a foundational technology that is rapidly becoming essential. From healthcare to finance, logistics to entertainment, AI is driving efficiency, innovation, and new capabilities that were previously unattainable. The widespread adoption of AI-powered tools like recommendation algorithms, autonomous systems, and data analytics platforms underscores how ingrained AI has become in our lives. These are not just hype-driven experiments; they are mission-critical systems that businesses and consumers rely on daily. I believe the hype around dystopian displacement has never taken place. The jobs lost in Hollywood were not tied to AI, at all. I believe there are 3 bubbles, the “Threat” Bubble, the “Tech Bubble” and the “Creative” Bubble. They are all on their own timelines. I believe the Creative Bubble is already on the “Slope of Enlightenment” and will continue amongst the heavy investment by Big Tech. The Tech Bubble is the Chip race and there will be more competition in that space as time grows. Companies like Nvidia are not just riding a wave of hype; they are producing tangible, high-demand products that power the AI infrastructure itself. The fact that other tech giants are racing to develop their own AI chips only highlights the critical importance and long-term potential of AI technology. The competition to innovate and create more advanced AI systems suggests a robust and growing market, not a bubble waiting to burst.
In essence, the AI revolution is here to stay, and while market sentiment may fluctuate, the underlying technology is too integral to the modern world to simply fade away. The Threat Bubble worked to create an urgency. The ongoing development and deployment of AI across various domains reinforce that we are in the early stages of a transformative era, not the end of a fleeting trend.
About the Author
Curt Doty specializes in branding, product development, social strategy, integrated marketing, and UXD. He has extensive experience on AI-driven platforms MidJourney, Adobe Firefly, ChatGPT, Murf.ai, and DALL-E. His legacy of entertainment branding: Electronic Arts, EA Sports, ProSieben, SAT.1, WBTV Latin America, Discovery Health, ABC, CBS, A&E, StarTV, Fox, Kabel 1, TV Guide Channel, and Prevue Channel.
He is a sought after public speaker having been featured at Streaming Media NYC, Digital Hollywood, Mobile Growth Association, Mobile Congress, App Growth Summit, Promax, CES, CTIA, NAB, NATPE, MMA Global, New Mexico Angels, Santa Fe Business Incubator, EntrepeneursRx and AI Impact. His AI consultancy RealmIQ helps companies manage the AI Revolution.
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