Copyright Business Insider
The stock market's AI mania might not end well. That's a possibility being turned over in the mind of every investor watching the sell-off in tech stocks this week — and more warning signs are mounting, according to Gary Marcus, the former head of Uber AI Labs. Marcus, who led Uber's AI arm after his machine learning company was acquired by the ridesharing giant in 2016, said he had big doubts about investors' hype for artificial intelligence, which has catapulted tech valuations to sky-high levels in recent years. But the numbers simply don't add up, Marcus said, speaking in a TV interview on Bloomberg on Tuesday. "It is a bubble. The question is, when will the bubble pop?" Marcus said. "The valuations just don't make sense in terms of the income that these companies are making, and the enormous amounts of infrastructure that they require. It's just not economically sensible." There are a few things driving Marcus's skepticism: Related stories Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know AI tech isn't as advanced as investors think. Marcus said he sees a longer timeline for AI development than others have suggested. It could be 20 years before things like AI-driven autonomous cars become mainstream, and as much as 30 years before generative AI that people can "trust to do anything you want," he added. Marcus, said he had been writing about LLM hallucinations since 2001. "People just keep saying, 'Oh, we'll just add more data. It'll solve these problems.' And those are always false promises," he said. Valuation warning signs. It's hard to know how overvalued AI firms are at the moment, Marcus said, though he pointed to warning signs, like OpenAI being valued at around $1 trillion despite recording a net loss of $11.5 billion in the last quarter. Circular AI deals. He also pointed to the "circular" nature of the AI economy, wherein large AI firms are purchasing services from each other. OpenAI for instance, has struck deals with Amazon, Oracle, and Microsoft. "It just doesn't really make sense," Marcus added. "That's another reason to think it's all going to fall apart." When the bubble does burst, Marcus said he saw a series of duire consequences impacting markets and the economy.
