Without suggesting artificial intelligence is presently, or necessarily will become, an “investment bubble” where capital is overallocated, it is at least worthwhile to remember than investment manias have happened before, as it the internet or “dot.com” bubble between 1995 and 2000.
It also is worthwhile remembering that, early on, ultimate winners are hard to identify, as many of those winners are not yet founded at the beginning of a period of exuberance. If we look at 1995 as the beginning of the internet investment boom, only a few firms, including Apple, Microsoft and Amazon, had been founded prior to 1995.
But that is only a list of “winners.” There were many “losers” as well. One of the firms on the following list still exists, even if it entered and exited bankruptcy at least once, with a major business pivot along the way.
For example, the technology-heavy NASDAQ composite index plummeted from its peak of 5,048.62 in March 2000 to around 1,139.90 in October 2002, representing a loss of over 77 percent. Hundreds of venture-funded and privately-financed firms went bankrupt.
source: Global Entrepreneurship Institute
The point is that ultimate winners from AI are going to be hard to identify in the early going, as many of the ultimate winners are not yet founded or clearly on a path to success.
Nor should we discount the ability of leaders in a prior era (Microsoft and Apple) to make strategic pivots that allow them to thrive in the next era.
Finally, overinvestment seems always to be a risk when GPTs are born.
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