You don’t have to be as old as me to remember the dotcom crash of March 2000. But, by the same token, there are plenty of senior execs and fund managers around who would have been children at the time.

Are their perceptions of the inevitability of AI’s success, their assumption that we are all going to live in an AI world, leading us to a similar cliff edge? Certainly, the relationship between the profitability of AI assets and the stock price of those in control of those assets, seems familiar from those days. The magnificent 7 (Amazon, Apple, Alphabet, Tesla, Microsoft, Meta, Nvidia) have sent the US stock market (and thereby global markets) to new heights, despite no good macroeconomic news. Indeed, they have uncoupled from ‘real world’ stocks, trading at 30+ x earnings compared to 19x for the rest of the S&P, even after the rest’s boats have risen on their tide.

It seems certain there will be some correction. But will the market lose 78% of its value (Nasdaq in 2000), will AI companies go the way of boo.com, Global Crossing or WorldCom? No. For a start the main AI companies are the ones that took a hell of beating in 2000 but survived and then thrived. They have real existing businesses, revenue streams and balance sheets.

Also, AI and, in particular, Gen AI has transformed from theory to being in all our lives in an incredibly short space of time. There are still big questions over business models, but as AI loss-leads its way into becoming indispensable the inevitable consequence is that pricing for profit will follow.

The big caveat is that some of the ethical and societal risks may still prove immensely costly both for the companies concerned and for nation states. For instance, the chickens of blithely stealing IP for LLM training are coming home to roost in the hen house of the courts. Recent judgments (against OpenAI for instance) imply that the law understands it is an open and shut case: AI companies have to stop stealing and pay for what they take, and for what they already took. Quantifying this cost to the AI industry is anyone’s guess.

More importantly, while governments race to be AI’s new best buddy, not much thought seems to be going into how they will pay for the mass unemployment it will cause. The mantra ‘AI creates time for creativity and more productive work’ is bigger bullshit than ‘do no harm’ ever was. Sure, if you’re a metropolitan elite coder or avant garde artiste. But not if you work in a call centre or are a box tick bureaucrat in the civil service or anywhere else. Then you are just out of work. AI can do your job, but it can’t pay the taxes that are needed to pay your benefits, because even if it does double your productivity and boost your organization’s profit, where do you think that money is going to go?

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