Mustafa Suleyman, DeepMind cofounder and now Microsoft AI’s CEO, said at the Aspen Ideas Festival last month: 

“The economics of information are about to radically change because we’re going to reduce the cost of production of knowledge to zero marginal cost. In 15 or 20 years time, we will be producing new scientific, cultural knowledge at almost zero marginal cost. It will be widely open sourced and available to everybody. I think that is going to be a true inflection point in the history of our species.”

Mira Murati, Chief Technical Officer of OpenAI said last month: “Some creative jobs maybe will go away, but maybe they shouldn’t have been there in the first place.”

A review of Ray Kurzweil’s new book, The Singularity Is Nearer, last month says:

“The 76-year-old scientist and engineer has spent much of his time on earth arguing that humans can not only take advantage of yet-to-be-invented medical advances to live longer, but also ultimately merge with machines, become hyperintelligent, and stick around indefinitely.”

And those statements are just from the last month. Sam Altman has been saying outrageous things for the last year. Here are some examples: “Could AI create a one-person unicorn? Sam Altman thinks so — and Silicon Valley sees the technology ‘waiting for us’.” And: “What I and others really “want is a super-competent colleague that knows absolutely everything about my whole life, every email, every conversation I’ve ever had, but doesn’t feel like an extension.”

Anyone who has read George Orwell’s 1984, the dystopian novel that “centres on the consequences of totalitarianism, mass surveillance, and repressive regimentation of people and behaviours within society,” will say Altman is wrong.

Altman has also indicated a readiness to invest heavily in AGI development (with other people’s money), expressing indifference to the cost. He stated,

“Whether we burn $500 million a year or $5 billion or $50 billion a year, I don’t care. I genuinely don’t. As long as we can stay on a trajectory where we eventually create way more value for society than that, and as long as we can figure out a way to pay the bills, we’re making AGI. It’s gonna be expensive, but it’s worth it.”  

Sam Altman and the other AI “visionaries” didn’t start this game. They are just riding the wave. In the last five to ten years, we have heard that ride hailing will eliminate all private cars and thus all parking lots, freeing millions of acres in space. Cloud kitchens will replace restaurants because we are too busy (and rich) to cook for ourselves. Neo-banks will replace traditional banks because they don’t need a building and algorithms can make better decisions than can humans. Crypto will prevent the federal reserve from enabling inflation. Tele-health will enable us to get good medical care without visiting doctors.

Sometimes the hype includes a time frame. Elon Musk has been predicting self-driving cars for years and even the BBC published an article titled “Why you have (probably) already bought your last car” six years ago in 2018. Geoffrey Hinton said in 2016 that all radiologists would be replaced in five years. Many consulting firms said in 2017 that AI will provide economic gains of $16 trillion by 2030, and we are more than halfway there.

Top-Down Hype

A lot of this hype comes from the top. CEOs are excited by AI because they have been told that it will enable them to eliminate people, an obvious benefit to the bottom line. Because CEOs like this type of optimism, they have a tendency to promote people with optimistic messages, thus fueling a competition to make outrageous statements.

Business school professors like to say the same things but use different words. One of their favorite terms (and from economists) is “general purpose technologies.” These are technologies that have had or will purportedly have a broad impact on an economy. Electricity is one of those technologies and business professors like to say that AI is one of many that companies are now implementing.

Others have created a longer list. For instance, Scott Kominers, a Harvard Business School Professor and Andreessen Horowitz crypto research partner, has pushed non-fungible tokens and their use in blockchains and the metaverse, technologies covered in a Wall Street Journal article (Kominers also adds self-driving vehicles) entitled: “After a Sugar High of Free Money, These Billion-Dollar Technologies Need a Nap.”

But instead of offering a way forward through specific applications the professor says that “the metaverse, blockchain and AVs are all ‘general purpose’ technologies that must fit in with all kinds of other things, including laws, infrastructure, and people’s expectations,” as if that justifies his enthusiasm for them. What about identifying the first customer and applications, the second one, and the third one? Those kinds of questions are ignored by those competing to make the most outrageous statement.

Why do startups and VCs (and professors) make outrageous claims? Because this is the way to quickly become a billionaire, not the slow route of satisfying customers and then expanding your market.

The fast way to profits is to make outrageous claims and then benefit from a surging stock market. Founders and venture capitalists will say a startup is worth billions and expect us to believe it. CEOs of big tech companies do the same thing but at least they offer products and have revenues.  

We Need a Return to Sanity

When will sanity return? It may take months, perhaps even years. Nobel Laureate Robert Shiller describes economic bubbles in his book Irrational Exuberance in terms of a “psychological epidemic” and thus illuminates “why it is so difficult for smart money to profit by betting against bubbles: the psychological contagion promotes a mindset that justifies the price increases, so that participation in the bubble might be called almost rational.”

Luckily, an increasing number of respected investment people are questioning the hype just in the last two weeks, joining the longer list of technologists (e.g., Rodney Brooks, Yann Lecun) who have been questioning the hype for much longer.

Ken Griffen, founder and CEO of Citadel, is often told he should invest more in AI, and in response says: “‘So tell me how you use AI at your firm today,’ and you get these big smiles, and you get these really enthusiastic answers that have almost nothing to do with AI.” Unfortunately, people conflate the contributions from algorithms, Big Data, and AI, and so end up concluding that AI has made big contributions over the last 10 to 20 years.

“A leading economist and life-long ‘bull,'” Ed Yardeni, warned on Tuesday of a bubble in artificial intelligence stocks.” He said, “AI rock stars such as Nvidia’s CEO and OpenAI founder Sam Altman were overhyping the technology, helping boost AI stocks to new highs.” He continues:

“While we love the productivity-enhancing possibilities that artificial intelligence offers, the AI phenomenon has many of the hallmarks of an inflating bubble. There are big bucks chasing the AI dream. New kings of industry have been crowned. And the hyperbole is flowing.”

“Goldman Sachs head of global equity research, Jim Covello, last week warned in a report that investor sentiment on AI stocks could turn negative and that AI’s economic benefits are exaggerated.”

Chinese CEOs are saying the same thing. “Robin Li Yanhong, the founder and CEO of Baidu, the biggest search engine in China, said that the country has too many large language models and too few practical applications.”

Sanity might be about ready to return to the market. Just maybe, we have reached peak hype.