Comment on The air begins to leak out of the overinflated AI bubble
sugar_in_your_tea@sh.itjust.works 1 week agoYou can do it easily with a balloon (add some tape then poke a hole). An economic bubble can work that way as well, basically demand slowly evaporates and the relevant companies steadily drop in value as they pivot to something else. I expect the housing bubble to work this way because new construction will eventually catch up, but building new buildings takes time.
The question is, how much money (tape) are the big tech companies willing to throw at it? There’s a lot of ways AI could be modified into niche markets even if mass adoption doesn’t materialize.
helenslunch@feddit.nl 1 week ago
A bubble, not a balloon…
sugar_in_your_tea@sh.itjust.works 1 week ago
You do realize an economic bubble is a metaphor, right? My point is that a bubble can either deflate rapidly (severe market correction, or a “burst”), or it can deflate slowly (a bear market in a certain sector). I’m guessing the industry will do what it can to have AI be the latter instead of the former.
helenslunch@feddit.nl 1 week ago
Yes, I do. It’s a metaphor that you don’t seem to understand.
No, it cannot. It is only the former. The entire point of the metaphor is that its a rapid deflation. A bubble does not slowly leak, it pops.
sugar_in_your_tea@sh.itjust.works 1 week ago
One good example of a bubble that usually deflates slowly is the housing market. The housing market goes through cycles, and those bubbles very rarely pop. It popped in 2008 because banks were simultaneously caught with their hands in the candy jar by lying about risk levels of loans, so when foreclosures started, it caused a domino effect. In most cases, the fed just raises rates and housing prices naturally fall as demand falls, but in 2008, part of the problem was that banks kept selling bad loans despite high mortgage rates and high housing prices, all because they knew they could sell those loans off to another bank and make some quick profit (like a game of hot potato).
In the case of AI, I don’t think it’ll be the fed raising rates to cool the market (that market isn’t impacted as much by rates), but the industry investing more to try to revive it. So Nvidia is unlikely to totally crash because it’ll be propped up by Microsoft, Amazon, and Google, and Microsoft, Apple, and Google will keep pitching different use cases to slow the losses as businesses pull away from AI. That’s quite similar to how the fed cuts rates to spur economic investment (i.e. borrowing) to soften the impact of a bubble bursting, just driven from mega tech companies instead of a government.
At least that’s my take.