Artificial intelligence

Victorian rail mania has lessons for AI investors

12 Jul 2024

Excitement over artificial intelligence has spurred a wave of investment. In the mid-1840s, British speculators similarly went wild for another capital-intensive technology: railways. The historic boom and subsequent bust provide a salutary warning for today’s hyped-up markets.

Microsoft opens windows onto AI antitrust paradox

10 Jul 2024

The software behemoth is ceding its non-voting board seat at OpenAI, the ChatGPT maker essential to its artificial intelligence plans. Building a silicon mind may take $1 trln, however, making deep pockets as powerful as governance rights. A bigger, messier crackdown looms.

Why AI may fail to unlock the productivity puzzle

4 Jul 2024

The world’s richest economies are grappling with slowing growth in output. Many investors believe artificial intelligence can provide a much-needed boost. But four features of the technology suggest the benefits will be limited – and might even achieve the opposite outcome.

Data centre boom reveals AI hype’s physical limits

4 Jul 2024

The investor frenzy over artificial intelligence assumes there will be enough infrastructure to support apps like ChatGPT. But a $1 trln rush to build data centres faces planning restrictions and energy constraints. That will limit processing power and push up costs for users.

Nvidia customer’s valuation voodoo tests AI mania

2 Jul 2024

Germany’s $1.4 bln Northern Data has access to the US giant’s sought-after chips and makes money by renting them out. It may re-list parts of the business on the Nasdaq. If investors accept a mooted $10-16 bln price tag, it’s a sign the market has truly lost touch with reality.

The economics of AI points to value of good data

28 Jun 2024

Investors chasing the artificial intelligence boom have pushed up the value of $3 trln chip supplier Nvidia and big cloud computing firms. Yet AI models have dubious benefits unless they are trained on reliable information. Moreover, high-value data makes them cheaper to develop.

Banks grab AI-generated tiger by the tail

26 Jun 2024

Sleeker IT systems, stronger fraud defenses and other algorithmic upgrades could yield nearly $200 bln of profit for lenders by 2028, one study finds. An efficiency revolution isn’t evident in valuations, however. The new tech may pay higher dividends to customers than investors.

A warning from history about large-cap stock booms

21 Jun 2024

Five decades ago, shares in a handful of large companies like IBM and McDonald’s propelled the US stock market to new highs before collapsing. As investors pile into tech giants led by $3.3 trln Nvidia, the earlier period may be instructive for those who believe history rhymes.

AI inverts tech’s growth and value buckets

14 Jun 2024

As the software boom’s easy growth fades, once-racy giants like Salesforce - and their valuations - look stodgier. Yet aged rival Oracle added $45 bln in market value on artificial intelligence-driven growth. The latest mania is flipping tech investors’ taste for new over old.

Trustbusters loom larger for Microsoft than Nvidia

6 Jun 2024

Tech is full of natural monopolies, and artificial intelligence may be no different. Regulators prefer to act quickly to stop abusive actions snuffing out competition. The $3 trln chipmaker’s dominance will be hard to dislodge. The software giant’s AI deals appear more fragile.

Elliott nudge may lead to slow-motion SoftBank LBO

5 Jun 2024

The US activist wants the $88 bln Japanese tech investor to boost its share price via a $15 bln buyback. That could raise SoftBank boss Masayoshi Son’s stake from a third to 40% and in time spur him to take the group private. The risk for Elliott is that he binges on AI instead.

Precision-medicine IPO deserves Groupon discount

31 May 2024

Tempus helps tailor treatments with its library of DNA and other tests. In a market giddy about AI, it could be worth $6 bln. One hitch is that founder Eric Lefkofsky, who started the online coupon provider, will keep control. The marginal value of its data is also shrinking.

Snowflake’s growth story is worryingly typical

23 May 2024

The $55 bln software firm’s revenue is growing rapidly, partly because of AI initiatives, and investors are rewarding it. But marketing costs and stock-based pay are high, and semiconductors costs are rising. As tech newbies show, excitement based on sales growth often thaws.

The $5 trln AI boom could both succeed and fizzle

21 May 2024

Tech giants are making hefty investments in artificial intelligence in the hope of gigantic future profits while enjoying frothy valuations. Yet past frenzies in railways and telecom show capital-intensive innovations can change the world while leaving investors short-changed.

Hollywood is first and last defense in AI war

21 May 2024

Scarlett Johansson is calling on regulators to protect individual rights after she accused Sam Altman’s ChatGPT of using her voice. The actor’s star wattage lends heft to the threat of legislation and litigation. If Tinseltown doesn’t succeed, though, it’s the wild west.

Nvidia completes pricing-power circuitry

21 May 2024

The $2 trln chipmaker’s gross profit margin is approaching an astonishing 80%, underpinning ever-greater expectations. AI data centers are turbocharging boss Jensen Huang’s ambitions. The exorbitant demand will in turn lead to even greater clout over customers in the longer run.

China’s cars fine-tune their driving skills

21 May 2024

Automakers in the country are touting autonomous driving, and Tesla is preparing to join the fray. On this week’s Exchange podcast, Maxwell Zhou, CEO of Alibaba-backed DeepRoute.ai, explains why progress is accelerating and how that is already changing consumers’ expectations.

AI will help treat Big Pharma’s looming illness

15 May 2024

Drug discovery is a long and costly process with success rates below 10%. Caps on prices and shorter patent periods in the US will also make life harder for the likes of Pfizer, AstraZeneca and rivals. Despite patchy results, betting on machines may be the best hope of a cure.

China stock rally leaves Alibaba out in the cold

13 May 2024

The e-commerce giant’s shares are up less than 5% this year despite Tencent’s surging by a quarter. Boss Eddie Wu is promising stock buybacks and dividends. But investors are sceptical on Alibaba's growth prospects and whether it can unlock value after a botched restructuring.

Elon Musk clearly sees AI hallucinations

10 May 2024

Even though the Tesla billionaire expects the cutting-edge tech to make all jobs obsolete someday, he says he hasn’t found practical use for it in some of his businesses. It’s a reality other CEOs will soon confront, too. Humans are still learning financial lessons the hard way.