Artificial Intelligence: The New Metaverse or a Truly Massive Revolution?
It's a question worth asking.
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Artificial intelligence was one of the key themes of 2023.
The success of OpenAI's ChatGPT system is a case in point. We also recall the controversy surrounding the dismissal of Sam Altman by the OpenAI board, before he was urgently recalled in view of the risk of a massive brain drain at OpenAI to follow their charismatic boss.
On the stock market, Nvidia had an extraordinary year in 2023, with a performance of +239%. With a market cap of almost $1.4T, Nvidia is now one of the 10 most highly valued companies in the world. At the rate Nvidia's share price is rising, we could see the company reach the Top 5, or even the podium, in the coming months, as 2024 has got off to another flying start for the specialist in microprocessors that will be at the heart of the emergence of AI in our societies.
Nvidia is one of the so-called Mag 7, for “Magnificent 7”. Companies that will have single-handedly enabled the S&P 500 to perform extraordinarily well in 2023, while the rest of the market was suffering.
Incidentally, in the last few days, Microsoft has overtaken Appel as the world's top capitalization at $2.9T. Microsoft is boosted by AI too!
Nevertheless, despite this spectacular progress in artificial intelligence capabilities, reflected in record stock prices for promising companies in the sector, we are not yet witnessing a massive adaptation. Far from it!
As a result, we're beginning to see a widening gap between those who are embracing artificial intelligence, because they see its use as revolutionary, and those on the other end of the spectrum who haven't even begun to take an interest.
This gap is glaring between individuals, but even more disturbingly, it's also glaring between companies.
Studies in this field are multiplying.
Some economists anticipate explosive growth as artificial intelligence gradually replaces human labor. In an article for The Economist, Erik Brynjolfsson of Stanford University is among the most enthusiastic:
“Artificial intelligence will cause an explosion in productivity in the years to come.”
This productivity explosion takes us back almost 100 years when, in 1931, John Maynard Keynes made such a prediction:
“Three hours' work a day will still be more than enough to satisfy the old Adam in us.”
In 2014, meanwhile, economist Jeremy Rifkin estimated that "the ideal would be to work five to six hours a day."
We're not there yet, but it's certain that the artificial intelligence revolution will drastically improve productivity in the service sector, and increase employees' ability to do things, when it doesn't replace them!
As we face this new challenge, we can observe a surprisingly slow adoption of AI. I might even say very slow.
This slow adoption can be explained by reticence within companies on the part of employees who don't want to integrate a technology that has the potential to replace them sooner or later. To this we can add a still significant difficulty in considering how to integrate AI, or more commonly, the absence of an investment decision.
Artificial intelligence is not yet a priority in corporate investment programs. This is understandable for SMEs and Mid-Caps, but it even affects large companies with greater resources.
Among the Mag 7, the groups driving AI are investing massively: +30% for Microsoft this year, and +20% for Nvidia. Not scalded by the failure of his full Metaverse strategy, Mark Zuckerberg recently declared that "artificial intelligence will be our investment priority in 2024."
The figures are impressive, but if we exclude his behemoths whose domination will depend, among other things, on their transformation and the transformation of their offering by AI, investment isn't taking off. And investment isn't taking off even in America, which is still at the cutting edge of technology.
By some measures, investment in AI is even stagnating. By other measures, it's going backwards! This situation can be observed in all developed countries.
Final Thoughts
I've described the current state of AI, and this leads me to propose two possible conclusions.
The first is that AI is a fantasy that will join the metaverse. It wouldn't be the first time that Mark Zuckerberg squandered billions of R&D dollars on a field that's not breaking ground... Remember when he changed the name of Facebook to Meta...
The second conclusion is that even if AI is a truly massive revolution that will transform our societies, companies currently have neither the vision nor the means to adopt it.
I personally think that the second option is the most likely, but I'd be interested to hear your opinion on the subject.
The fear that arises from this conclusion is that the gap will continue to widen to the point where some companies will no longer be able to catch up. I'll be following this with you very closely in the months and years to come.
Hi Sylvain, interesting article. I agree with your point that AI will catapult our productivity (ChatGPT has already helped me write code and emails) but a systemic shift isn't there yet. We're assuming and predicting, which rarely turns out the way we expect.
And the stock market... yeah, the Technology Sector distorts what's really happening. $NVDA and $AVGO are making me worried. I wouldn't wish they should crash back to their fundamental levels bu settle in a trading range instead. Irrational exuberance should stop.