The artificial intelligence (AI) era is here with us and many investors are rushing in to become early investors to maximize their profit-making opportunities. But, is it all rosy and glossy? Not everyone believes in the AI sector entirely.

According to Emad Mostaque, CEO of Stability AI, the nascent sector could result in the biggest bubble of all time. What could be worse than a cataclysmic collapse of the market for tulips or jpeg monkeys? Mostaque believes the bursting of a hype-filled AI bubble will be worse. He warned that the speedily-growing AI sector might be headed for a massive bubble.

While speaking with UBS analysts, Mostaque forecasted:

“I think this will be the biggest bubble of all time.”

Just like the dot-com bubble of the late 90s, he insisted that he expects lots of hype around AI to inflate the stock market prices far beyond reason. According to CNBC, Mostaque warned:

“I call it the ‘dot AI’ bubble, and it hasn’t even started yet.”

With the hype surrounding AI growing at unexpected levels, also to say, even crypto’s bubbly reputation might eventually get overshadowed. AI is currently the shiny new thing that venture capitalists are throwing money at, and that has left the once red-hot crypto projects deprived of funds.

AI chatbot - Artificial Intelligence innovation digital concept in a bubble

MosaicML, NoTraffic, and CalypsoAI startups in the AI sector raised over $2 billion in recent rounds proving a growing interest from investors in the profitable and highly-dynamic AI industry. The surge in funding represents venture capitalists’ recognition of AI’s capacity to revolutionize sectors, support advanced innovations, and yield colossal profits. As expected, AI stocks have experienced a remarkable upward trend since the beginning of 2023.

Mysten Labs co-founder and CEO Evan Cheng believes that this shift in funding is because of the ability of AI products and applications to target a massive audience while the crypto sector just focuses on itself.

Related:How Artificial Intelligence Can Change the Roulette

AI Gaining Popularity

With AI already dominating headlines, investors seem to be salivating over the next big thing and they are ready to pounce on it. Stability AI itself has attracted more than $100 million from backers impressed by Stable Diffusion‘s ability to create incredible photos from text prompts. The tool currently boasts at least one million active users.

Beyond Mostaque’s startup, AI applications have undoubtedly infused our lives, from social media feeds to innovative and advanced sectors like transportation, medicine, and finance.

Notably, generative AI seems to be making a huge impact with tools like MidJourney, Google Bard, OpenAI’s ChatGPT, and Stability AI’s Stable Diffusion. Based on previous reports, generative AI may contribute a massive $4.4 trillion annually – and the artificial intelligence sector in general might be worth over $15.7 trillion by 2030.

Generative AI powers machines to generate fresh content such as images, text, or music based on patterns acquired from data. But Mostaque states that the AI sector has a long way to go.

Many institutional investors believe that artificial intelligence and machine learning will be the most influential technology that will help shape the world in the next five years. But for now, the technology is not yet ready for large-scale deployment industries like banking, as explained by Mostaque.

Despite all the ‘value’ in it, AI integration into mission-critical ecosystems will take some more time. Nevertheless, Mostaque is upbeat about AI’s long-term potential insisting the total investment required is about $1 trillion. He thinks artificial intelligence might be “more important than 5G” in increasing access to knowledge.

Also, he believes that people will operate powerful AI models locally, and human coders will become obsolete soon. Mostaque forecasted severe market consequences for firms that fail to embrace AI as required.

He stated:

“You’ll see the market punishing those that don’t use this.”

Mostaque made these remarks citing how Google’s Alphabet lost over $100 billion in one day after glitches in its Bard chatbot were revealed.

With AI behemoths like Microsoft, Google, and Elon Musk’s newest firm X.AI all speedily and strongly pushing for dominance in generative AI, expectations are highly inflated. However, Mostaque cautions bankers such as UBS against quickly incorporating tools such as ChatGPT into routine business processes.

While acknowledging the incredible huge opportunity that comes with AI, he thinks that firms need to approach investments in the AI sector cautiously.

Riding the waves of hype via bubbly peaks and troughs is not new in the tech space and certainly not strange in Crypto. Mostaque reminds us to get ready for a possibly bumpy ride into the ‘Dot AI’ era.

Related:We Are Beginning The Age Of AI

Companies Are Rebranding To Appear AI-Focused

Ramin Marzbani, a leading tech industry analyst and venture capitalist said that just like in the dotcom era, startups are aggressively promoting themselves as AI-focused aiming to increase their valuation. But, he agrees that there is some substance powering the AI boom.

Marzbani commented:

“We’ve had a couple of pitches from businesses that have been writing software for around 10 years, and now they’re re-branding the same product as AI just to get a higher valuation when nothing has fundamentally changed about the product they were making.”

According to him, it is a genuine thing for firms to do, unlike Web 3.0, which has somehow disappeared without a trace. But on its part, artificial intelligence, especially machine learning will have a massive impact at the technology platform level than blockchain ever had. Ultimately, it might have a bigger impact than all other technologies humanity ever invented.

About the author

Wanguba Muriuki is an Editor at Large for E-Crypto News and author of the book- "The Exploitative Intrigues of Cryptocurrency Scams Explained." He is also a passionate creator who sees every aspect of life from a written perspective. He loves Blockchain, Cryptocurrency, Technology, and Traveling. He is a widely experienced creative and technical writer. Everything and everyone is describable. The best description is written.

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