What: The FT discusses the current AI craze and wonders if this is going to lead into a bubble

Why it is important: the world is excited as many things seem possibles with IA, however, the market is not ready yet.

Another week saw record highs in US equity markets, driven by the Federal Reserve's signal of more interest rate cuts and market bullishness around tech giants' cash reserves and their perceived ability to monetize artificial intelligence (AI). However, concerns arise regarding the euphoria and inevitability narrative surrounding AI's potential impact, as valuations seem to price in the entire sea change prematurely. The AI narrative depends on uncertain assumptions, such as resource usage, copyright issues, and integration challenges.

While tech giants validate AI, developers express doubts about profit assumptions. Questions linger about AI's accuracy, productivity gains, and workforce integration. Copyright backlashes and litigation are gaining momentum, while monopoly concerns persist. Market concentration around a few tech firms raises regulatory risks, and factors like carbon pricing and copyright fines could challenge the "free" inputs needed for profitability.

The narrative may resemble a tulip bubble or the next combustion engine, prompting a need to question how the market prices this story.

Beware AI Euphoria