Companies that fail to integrate AI will suffer, but it will be one giant bubble: AI exec

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As artificial intelligence (AI) continues to record soaring adoption, Stability AI CEO Emad Mostaque has warned that although still in its early stages, AI has the potential to be one big bubble.

According to a CNBC report, Mustaque likened the rapid growth of AI to the “dotcom bubble” of the late 90s, stemming from the sky-high valuations of internet-based companies.

“I think this will be the biggest bubble of all time,” Mostaque said on a call with UBS analysts. “I call it the ‘dot AI’ bubble, and it hasn’t even started yet.”

Since the start of the year, the valuations of AI firms have reached new peaks, with OpenAI valued at nearly $30 billion. Mostaque’s Stability AI, the firm behind Stable Diffusion, is on course to raise a tranche of funds at a $4 billion valuation, a growing trend within the AI ecosystem.

AI chip-making companies like Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (AMD) (NASDAQ: AMD) have seen their valuations soar in the wake of an AI adoption spree.

Despite the impressive metrics, Mostaque argues that the bubble is yet to begin, hinting at the influx of an even larger pool of institutional investment. The executive opines that up to $1 trillion in investment will be injected into AI development “because it’s more important than 5G as infrastructure for knowledge.”

Mostaque urged companies to integrate AI into their offerings, warning that firms that fail to leverage the technology will face headwinds in the stock market. Stability AI CEO pointed to Google’s (NASDAQ: GOOGL) loss of $100 billion in under 24 hours following an error from its generative AI platform Bard during its launch.

“This will be one of the biggest investment themes over the next few years,” Mostaque stated. “You’ll see people moving from the best chip manufacturers to companies that are using this to impact their bottom line and their top line appropriately. And you will see the market punishing those that don’t use this.”

Mostaque notes that AI technology is still in its infancy and may not be ready for wholesale integration in certain sectors like financial services. Nevertheless, AI has made its debut in finance with Google launching an Anti-Money Laundering AI tool to assist banks in spotting anomalies in transactions.

Increased regulations may burst the AI bubble

While AI has been in development without the watchful eyes of regulators for over a decade, pundits believe that an increase in regulation may slow down the pace of innovation in the industry.

The incoming European Union (EU) AI regulation forced a coalition of tech executives to sign a letter warning against the risks of tight rules for the industry. The executives say that the EU’s proposed law could lead to the exit of several AI developers to friendlier jurisdictions, a move that OpenAI CEO Sam Altman has considered.

On the other hand, regulators are wary of the threat AI poses to several key industries such as Web 3, security, education, health, and finance.

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