How do we prepare, and what should we expect next?
Recently, I have been reading an increasing number of news stories and opinion pieces about how we may be in an AI growth bubble. I am not sure whether I agree or not. If true, what does that mean? What should we expect? How should we prepare? How long will it last and what’s coming next? Whether we are or not, it is always a good idea to be prepared. So, let’s dig in.
We can see the current Artificial Intelligence growth cycle is rapid and healthy. This latest growth jump began a couple years ago with the introduction of ChatGPT from OpenAI.
Since that time, billions of dollars have been invested by companies and industries. The AI industry is rapidly expanding into different sectors like GenAI. Each sector does something different.
Just consider how AI companies like Nvidia are rapidly growing, worldwide, in all these different sectors.
All AI is not created equal
AI growth is real. However, over time we have found the upward growth curve may be more like a staircase with growth then pause then growth again.
Let us pull the camera back and get a longer-term, historical perspective. We have been through this before with AI and in fact other sectors as well. As one example, consider the young Internet of the 1990s. When that bubble burst around the year 2000, many were hurt. It transformed everything. Many companies went out of business. Some investors lost money. Some workers lost jobs. Some customers were left high and dry.
However, we survived. The internet continued to grow. Today it is more important, powerful and expansive than ever before. While a bursting bubble is not pretty, and the mess and chaos can be considerable, some will be hurt and others will be rewarded. Either way, it is not the end. Growth of the Internet and now with AI will continue.
Bursting bubble is a cleansing agent separating winners from losers
Think of a growth bubble like a cleansing agent. It separates the survivors from the rest of the industry-wide noise. It brings order to chaose. It creates short-term uncertainly, but leads to long-term stability and growth.
So, if we are in an AI bubble today, and if it bursts, AI will not end. Rather, these bursting bubbles seem to be part of a rhythm, the ups and downs, stronger and weaker over time.
AI has been around for decades in different forms. It was hot before, then it cooled down until it got hot again. In fact, this has happened time and time again. I believe it will continue on this path going forward.
IBM Watson is example of growth and pause
As an example, consider IBM Watson. This AI was introduced on the TV game show Jeopardy in 2011. It rapidly grew over the next several years. Around 2016, they held the IBM World of Watson. This was a trade show in Las Vegas. I attended this event, and it blew me away.
Although I did see several weak links in their otherwise strong chain. And that was all that was needed to derail Watson’s growth. Over the next several years, Watson seemed to fade away. Now, IBM is trying to reboot growth once again with a brand-new service called “WatsonX”.
The temporary cool down is called “AI winter”
I am convinced AI will be an important technology used by every person and every company in every industry going forward.
Over time there will be successes and failures, but it will continue forward. I am also convinced there will be several bubbles to deal with going forward, as there has been in the past.
When Artificial Intelligence slows between growth waves, the name we gave it is “AI Winter.” I see this continuing; however, the slow periods may be shorter between growth cycles. Like with the Internet, which rapidly grew through the 1990s, then the bubble burst around the year 2000. It took several years, but the Internet stayed with us and grew.
Bursting growth bubbles don’t mean AI growth will stop
AI is not going away. It will stay with us. However, I also believe it will regroup and rapidly grow once again. This is the way it has grown over decades and I see that continuing.
The current growth wave started about two and a half years ago with OpenAI and ChatGP. It was quickly adopted by countless companies like Microsoft, Google, Apple, Amazon, Meta and so many others. Plus, many companies are implementing other types of AI. Plus, many companies in many industries are rapidly moving in this same direction.
This push-and-pull, or give-and-take is important to understand.
Who will survive the AI growth bubble?
That’s why I believe we should always assume growing technology like AI will always be in a bubble. And at some point it will burst. In fact, it may burst several times as AI has already done over decades of growth. But over time it will continue to grow.
Are the companies you are working with, investing in or working for long-term suriviors or not. Going forward not every company in the AI space will thrive or even survive.
When the Internet bubble burst, some companies not only survived, but continued to grow. Consider Amazon as one of many examples.
Today, these are some of the strongest and largest companies in the world. These are the companies and technologies we should look for with AI. This is how we should prepare for growth waves and dips.
Today, if we are in an AI bubble, it seems all companies are benefiting. Some more than others. However, if and when the bubble bursts, only the longer-term winners survive and grow. Some of the less secure companies may fade away.
This is just the natural progression of this important new industry.
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