That's not to say new developments in AI won't be useful and make money. I believe IBM's Watson is finding limited uses and makes money for IBM. But it wasn't the Singularity, any more than an IBM computer beating a checkers champion in 1962.
Today's Washington Post reports what I should have guessed.
The tech industry was deflating. Then came ChatGPT.
So Silicon Valley desperately wants large language models to be The New Big Thing.Last year, Silicon Valley was drowning in layoffs and dour predictions. Artificial intelligence made the gloom go away.
SAN FRANCISCO — A year ago, the mood in Silicon Valley was dour. Big Tech stocks were falling, the cryptocurrency bubble had popped, and a wave of layoffs was beginning to sweep through the industry.
Then the artificial intelligence boom hit.
Since then, venture capitalists have been throwing money at AI start-ups, investing over $11 billion in May alone, according to data firm PitchBook, an increase of 86 percent over the same month last year. Companies from Moderna to Heinz have mentioned AI initiatives on recent earnings calls. And last week, AI chipmaker Nvidia became one of only a handful of companies in the world to hit $1 trillion in value.
In San Francisco, it’s suddenly impossible to escape the AI hysteria. In bars and restaurants, people are conversing about using ChatGPT and whether AI will take their jobs — or take over the world....
The point is that as investors we should resist the temptation to do anything in particular. I think it's a bubble. Like all bubbles, yes, some people will get rich by making high-stakes bets, and it won't be me. But the title of Spencer Jakab's The Revolution That Wasn't: GameStop, Reddit, and the Fleecing of Small Investors speaks for itself. I was also impressed by a Rational Reminder podcast transcript, Lighting your Money on Fire with Thematic ETFs
At the start of 2021, not being a gamer, I hardly knew what nVIDIA was. Yet it has added about a percentage point to my Total Stock returns.
Meanwhile, I think it speaks volumes that both ARK Autonomous Tech. & Robotics ETF, ARKQ, and the iShares Robotics and Artificial Intelligence Multisector ETF, IRBO--blue lines--have lost money for anyone who invested in them since 2021--despite holding nVIDIA. They didn't hold enough of it--or soon enough--or enough of anything else--to make up for previous losses. There's no big upward spike at the end. A boring old S&P 500 index fund (red line), with a quarter of a teaspoon of AI, has outperformed both.
(Note: I used a price chart in order to include recent daily values, but the picture is the same if you include dividends.)