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Alarms Blaring That AI Bubble Could Collapse

Dec 06, 2024 - futurism.com
The article warns about the potential for a bubble in the artificial intelligence (AI) industry, drawing parallels with the Dot-com bubble of the late 90s. The S&P 500, a barometer of economic growth, is projected to finish 2024 with a nearly 27% gain, following a 24% spike the previous year, a trend not seen since the Dot-com bubble. The AI industry, like the internet industry during the Dot-com era, is driven by hype for a new digital technology and promises of limitless profits, despite the lack of a clear path to profitability.

The European Central Bank (ECB) has also expressed concerns about a potential bubble in AI stocks, warning of global economic repercussions if these firms fail to meet earnings expectations. The article suggests that the AI industry needs to start generating profits soon to prevent investor panic and potential economic fallout.

Key takeaways:

  • The AI industry is being warned as a massive bubble on the verge of bursting, similar to the Dot-com bubble of the late 90s.
  • The S&P 500 is trending to finish 2024 with a gain of nearly 27 percent, following a 24 percent spike the previous year, a back-to-back run not seen since the Dot-com bubble.
  • Despite the hype around AI, profitability remains elusive and its main uses so far are creating inferior versions of human art and drafting emails.
  • The European Central Bank has warned of a "bubble" in AI stocks, indicating a risk of adverse global spillovers if earnings expectations for these firms are not met.
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