AI Is in a Weird Place Right Now
Three years into AI mania, things continue to be volatile. The items capturing buzz continue to evolve while consumers are looking at AI with increasingly divergent viewpoints.
Consider the following AI developments that have been on my radar:
Chatbot platform craze has cooled. Efforts to turn chatbots into new-age digital platforms are not going as smoothly as some companies planned. The idea of using apps within ChatGPT, not surprisingly, has flatlined. The same goes for agentic commerce. Walmart provided the latest evidence that chatbot usage isn’t trending like some proponents hoped – purchase conversion inside ChatGPT was one-third the rate of purchase conversion on Walmart’s website.
Mania has turned to utility agents. OpenClaw and Claude Code are grabbing the buzz that previously went to consumer-oriented chatbots. In the process, AI utility has become more niche and difficult to access for the mass market. ChatGPT usage
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Wall Street to Silicon Valley: “Show Me the AI Money”
Earlier this year, we discussed how we were entering a new phase of AI mania in which more attention would be given to products and competition. The idea that a higher AI tide would lift all boats would become more nuanced. Wall Street, referring to a collection of different market participants, had given their OK to aggressive capex projections in exchange for this greater focus on product, and presumably, revenue and profit.
Due to ongoing questions on the product front combined with signs of some management teams possibly becoming intoxicated with AI mania, Wall Street appears far less willing to give Big Tech a financial pass.
In looking back over the past few months, we see that AI products have indeed received more attention. In addition, there has been a more serious discussion regarding competition. While there is evidence of text-based chatbots and generative media finding their way into the mass market, it’s been far short of transformational change.
Scattered AI-generated content like event fliers and fundraiser notices are appearing on social media feeds, pointing to growing casual usage of generative media models.
Many writing verticals have been infiltrated by AI assistants and text chatbots. It didn’t take long for education to fall victim to the creative writing killer.
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Big Tech Is Winning Over Wall Street
While Wall Street remains fully engrossed by NVIDIA, there is a story to be told that is flying under the radar.
While Wall Street remains fully engrossed by NVIDIA, there is a story to be told that is flying under the radar. With several key macro headwinds now in the rearview mirror, Wall Street has turned decidedly more optimistic on Big Tech (a bucket that I have long defined as including Apple, Alphabet, Meta, Amazon, Microsoft). Big Tech as a group is up 28% in 2024 while the S&P 500 is up 15%.
Here are Big Tech market caps, with NVIDIA added in for good measure:
Microsoft: $3.3T
Apple: $3.2T
NVIDIA: $3.0T
Alphabet: $2.3T
Amazon: $2.0T
Meta: $1.3T
A couple things jump out at me about those totals.
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AI Mania Is in Full Swing
It’s been intriguing to watch Wall Street and Silicon Valley become enamored by AI. Seemingly every week, we are met with the latest and greatest advancements made possible by AI models. ChatGPT may need to pass the baton over to Sora in terms of capturing hearts and minds. While all may seem well, AI mania is hiding a growing problem involving technology once again outpacing design.
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2023 Was a Year of Characters
As we wrap up another year, we look back at what comes across as an eventful 2023. Macro issues and lingering COVID talk led to a shaky start. We then saw a fair share of winners (“Barbie” / NVIDIA / OpenAI) and losers (Disney / consumer gadget sales / EVs). While most people would position “AI” as the tech story of the year, there’s something about that decision that doesn’t sit right with me. While AI buzz was certainly alive and well, the actual impact on consumers was less clear. Instead, 2023 came across as the year headlined by characters – Mark Zuckerberg, Elon Musk, Bob Iger, Jensen Huang, Satya Nadella, and Sam Altman. With each, a narrative took hold that came together to give the year a fast-paced news flow.
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