In the case of Microsoft andGoogleAI-related companies took a huge hit on the stock market after parent company Alphabet released disappointing quarterly results, losing up to $190 billion.
Despite convincing investors with the promise of its AI services, Microsoft's shares were down 0.7% even as trading stretched out.Unlike that, Google's parent company fared even worse, with shares falling 5.6% as it missed advertising revenue expectations.Meanwhile, AI chip maker AMD took a hit despite reporting a strong quarter.
The significance of this news is unclear. The stock market's decline could indicate that investors are starting to get wary of tech companies overpromising on AI, especially without a clear path to profitability. Meanwhile, shares of Microsoft and Alphabet hit record highs after a year of AI hype. Microsoft became a $3 trillion company earlier this month, a huge show of confidence in doubling down on its technology.
However, according to Deutsche Bank strategist Jim Reid, the market's downturn could be "indicative of some overstretching of the recent strong rally," according to a memo seen on Yahoo Finance. Other analysts are more optimistic, saying that this "knee-jerk reaction" to tech results is just noise and that the AI revolution has already begun.
It's still too early to tell if the drop in stock value has anything to do with investors losing faith in AI. Are they shocked by the staggering cost of scaling infrastructure? To meet growing demand, the data centers required for tools like ChatGPT, which Microsoft has integrated into its software, are not only costly to buildVery highand very expensive to run.
Has Wall Street really touched AI'spinnacle (of one's career etc)? Are we facing a bubble that is about to burst ? Ultimately, it will all depend onAI CompaniesWhether it can find a way to be profitable. In the process, the question of whether AI has arrived atpinnacle (of one's career etc)The debate continues.