From Bloomberg Opinion, December 20:
The progress of artificial-intelligence development seems almost certain to slow in 2025.
Surely one of the silliest things that happened in tech stocks in 2024 was the sudden tumble in Nvidia Corp. shares moments after its fiscal second-quarter earnings release in August. Chief Executive Officer Jensen Huang, who otherwise walked on water this year, mentioned a minor — and resolved — blip in production of its new chip, yet investors panicked anyway.
They soon sobered up. The world, it turned out, continued to spin. But what it highlighted were the deep anxieties lurking just beneath the thin surface of optimism on artificial intelligence. The market is on high alert for signs of the peak and will react disproportionately whenever it thinks it has found one. This doesn’t bode well for 2025, when cooler heads must prevail as the progress of AI development seems almost certain to slow, possibly to a crawl.
Over the past several weeks, AI leaders have been choosing their words carefully. Google CEO Sundar Pichai, speaking at a New York Times event, said he felt the “low hanging fruit” of AI had now been picked. Expanding on the point, he told Semafor: “As we go to this next level, you need more insightful breakthroughs.”
Sam Altman, the co-founder and CEO of OpenAI, talked about how he still felt his company would reach “artificial general intelligence” but that it would “matter much less” than some observers might have previously thought. Superintelligence would be the great disruptor, he said — but it’s further away.
Behind the scenes, several reports have suggested that OpenAI is struggling to conjure the great leaps in capability that had been expected. The Microsoft-backed company’s long-awaited Sora video generation model can still be considered a hugely expensive parlor trick. Recent model releases, boasting “reasoning” capabilities and other bells and whistles, have been plainly iterative but no less expensive to create than previous models. The “wow” factor of ChatGPT is ebbing away.
Apple, meanwhile, has yet to post any evidence of the iPhone “supercycle” that some had hoped would be spurred by the introduction of Apple Intelligence. In fact, the company’s tentative AI incursions have been something of an embarrassment. Its AI-generated summaries have ranged from the comical to the severely inaccurate. With past innovations, the company told itself it would be the best if not the first. With AI it hasn’t managed either.
The first indication of the impact of Apple Intelligence on the company’s bottom line will come from 2024’s holiday quarter sales. These will most likely be record breaking, as ever, but consumers are still largely making buying decisions based on better cameras and long-lasting batteries rather than AI. And it’s not as if there’s a sure solution on horizon — Cook said in June that he would “never” claim that Apple’s AI was 100% safe from hallucinations....
....MUCH MORE
As for the big dog, the intro and outro from July 2024's "Société Générale's Albert Edwards Is Not His Usual Cheery Self":
We are still riding the bubble, specifically NVDA. Here's the introduction to June 18's "Nvidia's Financial Dominance (NVDA)":
For the last year we have been referring to the AI phenomena as a bubble, perhaps not so much in financial terms but rather in terms of the psychology, the speculative frenzy. It's true in Nvidia's case, the stock could be cut in half and still be discounting the future with a 2-3% discount factor i.e. 33 to 50 times free cash flow.
However! Despite this we have been pitching a "Ride the Bubble" approach to the stock for over a year (we have an almost full decade with this one but it was in the last thirteen months that we thought it bubblelicious). Here's a July 1, 2023 post:
....So, we are faced with the decision whether-or-not to play a dangerous little game, riding the bubble knowing full well it is a bubble, or retiring to the sidelines.For now one of our favorite economists with one of our favorite stories.
Here's the version hosted at MIT....
When momentum ends it doesn't just stop, it reverses. If interested see July 2021's:
Lest we forget, over five trading days in April 2000 the Nasdaq dropped 25%
However, if memory serves, Amazon was down over 90% on that go-round. I had a friend who made quite a bit of money out of the decline but never bought back in.
The tech dot-com bubble is over there on the left side of the chart, 1998 -2000:
