Will GenAI Make a Dent in the Quant Ecosystem?
If 2023 was the year of the GPT then 2024 has been the year of reality checks, reflection and knowing that no one can really predict anything ten years out.
While there has been a huge influx of investment from venture capital in AI based ventures, to the point that anything with “AI” in the strapline of the pitch would warrant interest, the reality is that the hype is starting to wear off.
So Much Noise and Very Little Signal
Goldman Sachs June 2024 Global Macro Research report, “Gen AI: Too much spend, too little benefit?”, laid out the harsh reality of how many artificial intelligence efforts are not worth the time or the money for their expected returns.
In the report Jim Covello states, “AI technology is exceptionally expensive, and to justify those costs, the technology must be able to solve complex problems, which it isn’t designed to do.”
This has been the main problem with generative AI in general once you get past the basics of text generation then there is little else of merit in the technology. It is great for marketing copy, code generation (as I wrote about in March 2024) but for anything else it is going to take tacit domain knowledge and an awful lot of money to do anything complex. It is more cost effective to hire people.
We Need to Talk About NVIDIA
With the realities of the AI hype starting to cool, so did NVIDIA’s share price. With a nine percent drop from mid-June to mid-July (at the time of writing) some of the realities of AI are starting to dent GPU reliance. With over 80% of NVIDIA’s revenue coming from AI activities any form of cooling of GenAI hype will influence the share price.
And it is not just NVIDIA suffering, the other main players in the AI arena Microsoft, Alphabet (Google) and other chip makers are starting to see corrections in the stock prices as the harsh reality is that AI might not live up to expectations.
Sam Altman, the poster child of GenAI, is steering OpenAI to a projected $5bn loss in 2024.
Put the Singularity on Ice for Now
There is some debate on whether a new AI winter is approaching, the stock market has shown their opinions in the pricing of the major players. The correction was long due as the last eighteen months of hype have not delivered much apart from questionable marketing copy.
For now, jobs are safer in the hands of the people that do them. The real question is how the conversation will look in the next two, five and ten years.
References
Jason Bell is a software developer of over thirty five years. He is also the author of Machine Learning: Hands on for Developers and Technical Professionals – published by Wiley in 2014 and a second edition in 2022.
