Right now, chipmakers like Nvidia are having a bit of a moment on Wall Street. Their stock value has jumped tremendously and investors are eager to get exposure to the seemingly ascendant world of high-end computer components. While tech has been lucrative for decades, chips in particular are a major focus right now. What’s up with that?
AI Speculation
There’s just two words at play with chips’ sudden uptick in value: artificial intelligence. Computer technology has finally grown sophisticated enough to create algorithms capable of mimicking human speech patterns and collating large data sets to create useful outputs. These AIs could have interesting applications for the world’s biggest companies.
Big Tech Loves AI
The most important names in the tech world, including Microsoft, Google, and Facebook, are piling into the AI sphere. These big tech companies are burning billions of dollars to ramp up their AI infrastructure, and computer chips capable of performing complex tasks like large language models are critical to that plan.
Why Does AI Matter?
Many tech companies are convinced that AI is going to define the future of technology. Investors are beginning to grow a bit dubious about the technology, given its exorbitant costs and seemingly narrow present-day use cases. Still, many tech-savvy people are very excited about thinking machines that can handle any intellectual problem.
Practical Applications
Companies have put a lot of money into making AI the future of everything. There are some genuinely impressive practical applications for the technology, too! It can create vast amounts of text in a short span of time, generate code for tired programmers, and even create entire images by collating existing data.
Finding the Money
Of course, the trick for companies betting big on AI is going to be finding the money. Some products, like GitHub Copilot, can be actively monetized so users can access it. Others, like the kinds of AI used by internal marketing teams, for instance, will be harder to justify the cost for. Still, investors are betting big on the future of the technology.
Just a Phase?
Of course, the kinds of chips required to make large language models, generative AI, and other programs like them function aren’t exactly versatile. Using such tech to power, say, a gaming laptop would be like using a bulldozer to build a sandcastle. As such, if the AI boom collapses, expect to see share prices for companies that specialize in this hardware, like Nvidia, to nosedive.
AI and Regulation
Heading into a big election with generative AI in play could also prove to be a bit tricky. While excitement around the technology remains high, many people have noted it’s likely that the US government could enact regulations on AI to prevent its use to spread misinformation.
High Costs
Beyond the threat of regulation, AI’s failure to turn a profit so far is beginning to put the technology’s high price tag into sharper focus. After all, operating bespoke hardware that consumes huge amounts of power at a loss isn’t a sustainable business model. When will this begin to reflect in companies’ willingness to fork over billions for Nvidia-made computer chips?
Read More: When Will AI Start Making Money?
The Big Winners
Microsoft, Amazon, and Google rake in millions of dollars every week, so it’s not like they’re in any danger of going out of business due to investing in AI technology. Still, the clear winner in this market is Nvidia, which has seen its stock price soar over the past three years with a huge uptick in interest around AI.
Read More: Is AI Losing Money? The Facts
How Long Will it Last?
For now, people who invested in computer chip manufacturers in 2021 are extremely pleased with themselves. But people who jumped on this hype train late might be wondering when the right time to cash out will be. Sadly, it’s impossible to tell when the bubble is about to burst—or, indeed, if there will be a burst at all. For now, one thing is clear: Wall Street loves AI today. Will they continue to do so tomorrow?
Read More: Why Is Everyone Freaking Out About Nvidia?