A Selection of Opinions:
“It is DATA! Stupid … !” “People who have used ChatGPT will have noticed that it can make mistakes and makes up facts simply because it does not have the right data.”
Caveat Emptor: For every winner there is a loser, and there will be plenty of losers in the generative AI investment craze.
Gary Marcus, Emeritus Professor of Psychology and Neural Science at NYU and a founder of the Center for the Advancement of Trustworthy AI, writes “The revenue isn’t there yet, and might never come. The valuations anticipate trillion-dollar markets, but the actual current revenues from Generative AI are rumoured to be in the hundreds of millions. Those revenues genuinely could grow by 1000x, but that’s mighty speculative.”
People who have used ChatGPT will have noticed that it can make mistakes (hallucinates) and makes up facts simply because it does not have the right data. Tech companies are working to improve their models. Some generative AI models, such as Bing Chat or GPT-4 are providing footnotes with sources that tell users where the response is coming from and to check its accuracy.
Financial services institutions are likely to be sceptical about the performance of Generative AI and its use cases in highly regulated businesses that require accuracy. Hedge fund quants using algorithmic and high frequency trading strategies will also set a high bar for Generative AI.
There Is Economic Substance: A study from McKinsey estimates that the impact of Generative AI on productivity could add trillions of dollars of value to the global economy. Its analysis put the potential added value at between $2.6 billion and $4.4 billion annually. The report also suggests generative AI could enable labor productivity growth of 0.1 percent to 0.6 percent annually up to 2040 depending on how quickly the technology is adopted and how workers’ time is redeployed.
In the U.K. the Confederation of British Industry (CBI) estimates there are currently 3,011 companies classified as AI companies supporting a total of $11 billion in gross value added to the economy. That is roughly similar to the impact of the U.K. travel agency industry. The CBI report also highlights AI’s “potential to fundamentally change all aspects of our digital lives and raise the game on productivity for all sorts of businesses.”
Fig. left: The economic potential of generative AI – The next productivity frontier, June 2023 MCKINSEY & COMPANY
Ash Patel of investment bank Deutsche Numis says: “The Generative AI sector shows AI’s rapid and explosive potential. Companies here are showing strong Product Market Fit (PMF) and ROI along with hyper scalability, which is driven by a truly exceptional crop of founders. We believe that Generative AI adoption will be quicker than, and catalysed by, cloud.”
It’s Not Just About Chasing Unicorns
Major public and private companies are investing in research and development (R&D) on AI solutions in major ways and the spending by tech market leaders is eye watering.
The stock market superstar Nvidia has increased R&D spending by 39 percent as they increase development of AI-focused chips. BT Group in the U.K. says it expects to replace up to 10,000 jobs with AI by 2030.
Meta plans to spend $33 billion this year to support “ongoing build-out of AI capacity.” Amazon is committed to spending many billions of dollars to build significant large language models.
EY has recently announced a $1 billion investment in a next-gen technology platform to enhance their Assurance Service Capabilities which includes AI software. Accenture announced it will invest $3 billion in AI to “accelerate clients’ reinvention” and will double AI talent to 80,000 people through hiring, acquisitions, and training.
To read the full story click on here – Source: Forbes