AI in the stock exchange, experts see risk of a financial speculative bubble

The great popularity of software such as Chat GPT has brought much attention and countless billion-dollar investments into the field of artificial intelligence, but some experts warn, this could be the next big speculative bubble.
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The digital world seems to be going through a phase of great renewal that seems to revolve around Artificial Intelligences.

It is no coincidence that in recent months, the OpenAI project and its generative software, Dall-E and ChatGPT have channeled much of the media attention and, especially in the second case, attracted huge billion-dollar investments, however, some experts explain. Generative AIs could be the cornerstone of the next speculative bubble.

The Artificial Intelligence boom

Until a few months ago, the concept of artificial intelligence, and their possible applications, was still in a little more than embryonic stage. Then, the Dall-E phenomenon, a generative AI, capable of processing graphical products, developed by Open AI, exploded. And, not too long after, it was the turn of ChatGPT, capable of simulating a realistic conversation, based on an artificial intelligence. Again, the result of Open AI’s research work.

These two projects, seemingly disconnected from each other, have kicked off what to many seems to be a real revolution in the digital world. With associated and related fears and concerns related to the possible uses of these highly advanced software.

These concerns have been fueled by the rapid emergence of countless similar software. I.e., a series, innumerable generative AIs that, by exploiting Machine Learning algorithms, are able to process codes, texts, images, digitally reconstruct images and videos, simulate voices by constructing entire speeches, starting from a text and audio sample of a few seconds, or a few minutes at most.

The boom in generative artificial intelligences, that is, artificial intelligences that can create new digital content, has attracted countless investments.

In recent weeks, Microsoft alone has invested more than $10 billion in the Chat GPT project and a similar amount appears to have been invested by Google for its own proprietary artificial intelligence project. Significant figures that are just the tip of the iceberg.

Artificial Intelligence in the stock market

The boom in the popularity of artificial intelligence triggered by Chat GPT has had direct effects throughout the industry, sending several financial stocks of artificial intelligence-related companies soaring.

To give some practical examples, at the beginning of the year, shares of SoundHound AI, a technology company that owns an artificial intelligence for speech recognition and natural language understanding, saw its stock trading at around $1.35.

Those same shares, by Feb. 13, a few weeks later, had gained more than 143 percent, coming trading at $3.28 after a peak, reached in the first week of February when they were trading at $4.63.

Something similar happened with the shares of C3.AI, an artificial intelligence software provider, whose shares, since the beginning of the year gained over 91 percent. Or , even more significantly, the case of BigBear.Ai, an analytics company that leverages artificial intelligence software whose shares, since the beginning of the year, have gained over 437 percent.

These are just a few examples that show a growing financial interest in the possibilities offered by artificial intelligence, in various fields of application.

This boom, involves not only companies specializing in Artificial Intelligence, but also companies indirectly related to such software. An example in this regard is BuzzFeed, whose shares, since the beginning of 2023, have gained over 134%. The boom in Buzz Feed’s stock value occurred between January 25 and 27, following CEO Jonah Peretti’s announcement that he would use artificial intelligence to improve certain controls.

In other words, just announcing a willingness to want to use artificial intelligence, in some business processes, was enough to send Buzz Feed’s value soaring.

The analysts’ concerns

Some analysts, observing the rapid growth of stocks related to the world of artificial intelligence, worry that artificial intelligence could be the next big speculative bubble.

While well in fact they mostly agree in seeing the great potential of the new possible applications of these software, there are not a few parallels to the great dot com bubble.

Many experts are pointing out a fundamental principle in finance, which is that it is not always important to be first. The world of artificial intelligence is in its infancy and being a pioneer in that field will certainly have important advantages

However, points out TSVC’s Spencer Greene in an interview with TechCrunch, AltaVista and MySpace were pioneers in what we would now call social media. And those companies have now almost completely faded into obscurity.

Concerns that artificial intelligences are just a speculative bubble, however, are not new. Back in 2018, there were fears that that bubble, which at the time was just beginning to inflate, would burst within five years. And as well, with almost perfect timing, five years later, not only has that bubble not burst, but rather, it has begun to expand faster and faster as a result of the advent of generative software such as ChatGPT.

Read also: Microsoft invests in OpenAI: is ChatGPT the secret to beating Google?

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