The AI Bubble Is About to Burst: The Unwanted Consequences of Generative Intelligence
For years, the promise of generative artificial intelligence (AI) has fueled a frenzy of hype, with visions of a world transformed by intelligent machines. We’ve been told that AI will replace human workers, revolutionize industries, and make our lives easier. But the harsh reality is that AI has failed to deliver on its promises, and the fallout is just beginning.
The Illusion of AI’s Potential
The launch of ChatGPT in 2021 sparked a wave of excitement about the potential of generative AI. Proponents claimed that AI would trigger a "fourth Industrial Revolution," completely reshaping the world as we know it. Even Goldman Sachs predicted that 300 million jobs would be lost or degraded due to AI. But a year and a half later, the reality is far different. Generative AI is not transforming business, and many projects using the technology are being cancelled.
The AI Hype Cycle
Generative AI is following the classic path of the Gartner hype cycle, which describes the recurring process of exaggerated expectations, followed by disillusionment and ultimately, productivity. Like many new technologies, AI has experienced a peak of inflated expectations, and we’re now entering the trough of disillusionment.
The Fall of AI
The Rand study published last week revealed that 80% of AI projects fail, more than double the rate for non-AI projects. The most compelling prototypes of generative AI products have been developed, but adopting them in practice has been less successful. The study attributed the failures to high investment requirements in data and AI infrastructure, a lack of needed human talent, and the unusual nature of AI’s limitations.
The Myth of AI’s Superiority
A recent study showed that the abilities of large language models such as GPT-4 do not always match what people expect of them. In particular, more capable models severely underperformed in high-stakes cases where incorrect responses could be catastrophic. These results suggest that AI can induce false confidence in its users and that AI is not as reliable as we thought.
The Billion-Dollar Question
For the moment, the biggest winner from the generative AI boom is Nvidia, the largest producer of the chips powering the AI arms race. As the proverbial shovel-makers in a gold rush, Nvidia recently became the most valuable public company in history, tripling its share price in a single year to reach a valuation of $3-trillion in June. But the question is: will AI ever live up to the hype?
The Future of AI
As the AI hype begins to deflate, we’re seeing more realistic AI adoption strategies. AI is being used to support humans, rather than replace them. Small AI models are being trained on specific data and deployed locally to reduce costs and optimize efficiency. And AI literacy training is becoming increasingly important to educate the workforce on the use of AI technologies.
The Truth About AI
The AI revolution will look more like an evolution. Its use will gradually grow over time and, little by little, alter and transform human activities. But the bubble is about to burst, and the consequences will be far-reaching. AI has failed to deliver on its promises, and the world is about to find out what happens when the hype turns to dust.
