The thing about bubbles is that we are certain that there is one only when they burst. And with all this artificial intelligence, is talking a lot about whether or not there is one around this technology. Of course there are indicators that set off alarm bells, but the curious thing is that we would not have believed that two of the greatest exponents in contributing to the development of this technology would maintain reservations. And Sundar Pichai, for Google, and Satya Nadella, for Microsoft, have not made much effort to deny the doubts.
Irrationality. Pichai declared to the BBC in an interview he noted “elements of irrationality” in the current AI market and warned that no company, including Google, will be immune if the bubble bursts. His words are especially striking because they come at a time when Alphabet shares have doubled in seven months, reaching a market capitalization of $3.5 trillion.
The CEO compared the situation with the Internet bubble of the late 90s, recognizing that although there was excessive investment that ended in bankruptcies and layoffs, today no one questions the profound impact of the Internet. “I hope AI is the same. I think it’s both rational and there are elements of irrationality in a time like this,” he explained.
When the numbers don’t add up. Skepticism is based on concrete data. OpenAI, Google’s most visible competitor in this field, has committed to spending $1.4 trillion in infrastructure for eight years while it expects to generate just $13 billion in revenue this year. Just like share In the Ars Technica media, Sam Altman himself, CEO of OpenAI, acknowledged to journalists in August that investors are “overly enthusiastic” about AI models and that “someone” will lose an “incredible amount of money.”
Microsoft also shows the cards. For his part, Satya Nadella has been equally forthright about the current limitations of the sector. At the beginning of the year already pointed out to claim that a milestone has been achieved in AGI (general artificial intelligence) is “just hacking the tests without meaning”, downplaying the benchmarks that so much marketing generates.
According to Nadella, the true metric of AI success should be reflected in countries’ gross domestic product: “When we say ‘this is like the industrial revolution,’ we should have that kind of growth that caused the industrial revolution,” he explained, referring to increases of 5-10% in GDP. That growth has not yet come.
Jensen Huang says exactly the opposite. While Pichai and Nadella talk about irrationality, NVIDIA founder and CEO Jensen Huang has presented spectacular results in the third quarter and settled the debate in his own way. “There has been a lot of talk about an AI bubble. From our perspective, we see something very different,” he commented. NVIDIA reported revenue of $57 billion in its latest quarter, up 62% from a year earlier, with net profits of $32 billion.
Its data center business has generated $51.2 billion, a record boosted by the sale of its Blackwell chips. According to Huang, sales of these GPUs are “skyrocketing” and cloud chips are out of stock. NVIDIA also projects a fourth quarter with revenues of $65 billion.
AI still doesn’t make money. NVIDIA does make money, a lot of money, but He does it by selling the shovels during the gold rush. The vast majority of companies that develop large language models are losing money spectacularly. OpenAI is the most obvious examplebut not the only one. Microsoft, Amazon, Meta and Google they are allocating tens of billions of dollars to build data centers dedicated to AI in a colossal bet whose profitability is not guaranteed.
For Nadella, what AI needs is something equivalent what Excel and email meant for the PC, that is, an app that makes the majority of users understand how to use AI. At that time we saw that the PC took a long time to find its place, especially until it reached mass adoption that transformed real processes.
There are chips but there is no energy to power them. In addition to the profitability problem, there is an immediate physical limitation. Nadella revealed recently that the biggest obstacle is not the lack of chips, but the energy needed to power them. “If you can’t do something like that (supply enough power), you’re going to have a bunch of chips sitting around in inventory that you can’t plug in. In fact, that’s my problem right now: It’s not that I don’t have a sufficient supply of chips: it’s actually the fact that I don’t have places to plug them in,” he admitted.
Microsoft, Google and other big technology companies are resorting to drastic solutions such as building their own small nuclear power plants (SMR reactors) to supply their future data centers. ARM CEO Rene Haas noted that energy needs could triplea challenge that calls into question the sustainability of the current expansion. Of course we don’t know how things are going to end, but no one doubts that we’re going to have a good time with it.
Cover image | Microsoft and Bloomberg
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