Is AI facing a big financial reckoning?
Some have likened the transformative potential of AI to the introduction of electricity or the railways. While it is true that the railroads transformed economies
Some have likened the transformative potential of AI to the introduction of electricity or the railways. While it is true that the railroads transformed economies – particularly of the US – plenty of people lost money along the way. Unlike rail tracks – which once built are good for decades – data centres are likely to need upgrading frequently to include the latest and fastest processors.
Add to that lot, concerns that some of the big AI companies have taken big stakes or lent money to each other leading to circular funding that means that any potential failures could have a damaging impact on the fortunes of others. There is also increasing cultural opposition to the build out and adoption of AI. A growing number of national, state or local governments are pausing, banning or restricting new data centre construction on environmental grounds thanks to their vast water and energy needs.
Meanwhile, high profile AI advocates have found themselves booed by students who fear that AI will replace many graduate level jobs. Despite all of that, Eileen Burbidge is still positive. "I see the glass half full - if you bought shares in chip makers a year ago you are feeling pretty good right now." Shares in Samsung and SK Hynix are up threefold and fivefold respectively over the last year, leading many to conclude that caution and profit taking after such massive gains was inevitable – and indeed healthy.
But there is no doubt that investors are watching companies plans for spending and their projections for when they get paid back with post euphoric scrutiny.
The BriefWire