Artificial intelligence (AI) is taking over – at least when it comes to the stock market and investors. In the past few months, we have seen the value of chip companies that have positioned themselves in the AI sector soar. Nvidia has overtaken Intel, a situation that might once have been unthinkable. Newcomers such as OpenAI and Anthropic have been making inroads into the market, attracting significant valuations from investors. And it seems that anyone who is anyone is getting involved in AI in some way.
If there was any doubt that AI was attracting big money, a look at the most recent round of quarterly results should have put that to bed.
Last week, several of the largest tech companies – Meta, Google, Microsoft, AWS – revealed increased spending on the technology as they each try to capitalise on the interest in AI.
But there is more to come. Big tech companies are planning to spend even more in building their AI arsenal into next year, and hoping to persuade customers to adopt it at scale.
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The question is, will Wall Street give them the space to do it?
Lest we forget, it is not too long ago that the same companies that are investing heavily in their AI capabilities were telling their staff that they needed to cut their cloth to fit the new economic reality, at the mercy of fluctuating share price. That new economic reality seems to include the shiny new AI toys, for which tech companies seem prepared to offer deep budgets.
If the promise of AI is realised, then the billions ploughed into developing the technology will be seen as a sensible investment. But if not, it won’t be the first time that a much-hyped new technology fails to live up to the forecasts. Fully autonomous cars, which have been in development for years, have yet to reach any sort of meaningful market. NFTs promising a new wave of artists revenue, selling for outrageous sums, have fallen out of favour. And lets not forget the world of crypto.
For now, Wall Street is watching, nervously. If there is a hint of the technology not reaching its potential, the money that has flowed in to AI companies could just as quickly flow out.
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