The recent hype over AI is much like the same fever that had fuelled crypto, when once you could slap 'blockchain' on the name of any company and see its stock soar fourfold.Martin Meissner/The Associated Press
Amid all the hoo-ha over artificial intelligence this year, Microsoft Corp. MSFT-Q, which has a stake in the laboratory behind the ChatGPT bot, has seen its shares go up more than 25 per cent.
Various AI stocks, with names you’ve never heard of, are hotter than hot, even with a recession looming and at the foot of a tech beatdown in the markets. BigBear.ai Holdings Inc., an information-technology services company, is up about 250 per cent on the year; at one point in February, it was up 700 per cent.
Wanna make money? Boy, do I have a great idea for you. Just add “AI” to the name of your company. There’s a voice-recognition company that used to be called SoundHound Inc., but went public in 2022 as SoundHound AI Inc. SOUN-Q. The stock has admittedly pared back some gains since then, but it is still up nearly 100 per cent for the year.
Any of this sound familiar? It’s the same fever that had fuelled crypto, when once you could slap “blockchain” on the name of any company and see its stock soar fourfold. I’m pretty sure that soon, as with crypto, the term “AI bro” will enter the lexicon to describe a young man who is passionate and enthusiastic about the industry.
Oh, wait – it has. An Urban Dictionary entry for “AI bro” was made in January of this year.
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Let’s face it, AI is the new crypto. All the hype, investment mania and scams of past years’ investment cycles are going to come back.
To that, you might slam your table, squint your eye around your monocle and say: “Wait that’s not right! At least AI does something. Crypto is just make-believe money!”
A commonly expressed view. And a wrong one. But let’s for the sake of argument say that it is correct. Has that distinction resulted in any difference in the markets?
It wasn’t just 2020, the year of the really expensive digital pictures, or NFTs, that crypto was booming. Remember 2017, when a market frenzy was sparked by the Canadian-founded Ethereum, which let anyone easily create their own coin?
At one point that year, the furniture chain Ethan Allen Interiors Inc. ETD-N was up 50 per cent, largely attributed to how its ticker at the time, ETH, was the same as the abbreviation for Ethereum’s ether coin.
While Ethan Allen eventually changed its ticker to distance itself, others fiercely coveted that nominal crypto association.
I wasn’t being hyperbolic when I wrote earlier that companies can slap “blockchain” onto their names and see their stock quadruple in value. That was exactly what happened when Long Island Iced Tea Corp. changed its named to Long Blockchain Corp.
Meanwhile, Eastman Kodak Co. KODK-N, the camera maker, saw its stock triple in value after a bad year by announcing it would go into crypto mining.
Then there were the outright scams. The infamous OneCoin raised US$4-billion, but there is no evidence it had even developed a digital currency based on blockchain technology. Such scams are so plentiful that the U.S. Justice Department is still announcing new 2017-era cases to this day.
Such scams abounded because they were easy. Regardless of what many think of it, there are defined metrics for what makes a cryptocurrency – namely in terms of the code that goes into it. But people can’t see or hold a cryptocurrency. So, it’s easy to claim you’ve made one. The end user doesn’t always have the sophistication to tell the difference until it’s too late.
Again – sounds familiar? Have you ever wondered how many purported “AI” projects are actually AI?
A London-based startup, Engineer.ai, once claimed to use artificial intelligence to help people build apps. It attracted US$30-million from investors, including a unit of Japan’s SoftBank Group Corp. SFTBY. The Wall Street Journal later reported that Engineer.ai’s AI claims were greatly exaggerated – actual humans in India were building the apps.
Such practices are so rampant, there is even a neologism coined for it: “AI washing.”
What it all boils down to is this: When crypto entered the mainstream, it was hard to define or even understand. In that messy environment, companies thrived and empires were built – and so also rose the scams and OneCoins of the world. AI is having the same moment now.