Wall Street sure does love a fad, and it looks as if artificial intelligence (AI) might be the next “it” thing. Shares of struggling digital-media company BuzzFeed Inc on Thursday soared as much as 200 percent after saying “AI inspired content” would become “part of our core business” this year. It apparently mattered little to investors that the type of content BuzzFeed has in mind includes its signature quizzes (“Try to Identify 8/8 of these Famous Rodents If You Can” or “If You Paid Attention In Third Grade, This Quiz Will Be Incredibly Simple”).
Based on the reaction in BuzzFeed shares, it would not be long before all sorts of companies in all sorts of industries trip over one another to announce some new initiative involving AI. Details? Do not bother asking. They will come later. All you need to know is that we are getting into AI! And it will be huge!
If all this sounds familiar, it should. Fads have always been a part of Wall Street, but seem to have really picked up during the dotcom boom of the late 1990s. Like AI now, iterations of the Internet had been around for a few decades, but the technology developed quickly to the point where it became available to the masses. For the first time, ordinary citizens could plug into the “world wide web” and start surfing. Companies tied to the Internet went public and watched their shares soar, with perhaps the most famous being Web browsing company Netscape, whose shares rose from US$28 to US$75 on its first day of trading as a public company.
Sure, everyone kind of knew the Internet would be big and change the economy. The problem was that nobody truly knew in what ways or how to make money from it — but that did not stop companies from trying. Public companies that had no clue how to exploit the Internet were suddenly announcing that they, too, were launching an “Internet strategy” or even adding “.com” to their names. Sure, their stock prices might have received a bump, but for every Amazon.com, there were probably about a dozen Pets.coms. The dotcom bubble soon burst, and the NASDAQ Composite Index, where many of the newly public Internet companies resided, fell almost 80 percent.
One of the more recent fads centered on the blockchain technology that underpins the digital currency craze. A blockchain is a digital database, or ledger, used to record information and transactions in a collaborative manner. Like the Internet, the technology promises to change the economy. In 2017, the blockchain was all the rage, and companies rushed to find ways to capitalize on it. Who can forget Long Island Iced Tea Corp, a microcap company and seller of non-alcoholic beverages that changed its name to Long Blockchain Corp and watched its shares soar as much as 289 percent in one day. The change did not help the struggling company, and it was delisted by the US Securities and Exchange Commission in 2021.
Special-purpose acquisition vehicles (SPACs) are another fad that cannot go unmentioned. Essentially “blank check” companies, these enterprises were made possible by the era of cheap and easy money. The thing about SPACs is that they have no business model; they just raise money from investors through an initial public offering and promise to use the cash to buy a yet-to-be-identified operating business. Yes, it was as speculative as it sounds, and the SPAC boom came crashing down last year once the US Federal Reserve raised interest rates at a historic pace
Will the budding AI boom end in tears as well? For most, of course it will, but that does not mean there will not be spectacular winners. It will very likely change the economy and our way of life. As of now, AI appears to be more like the Internet than SPACs. Just last week, Microsoft Corp said it was investing US$10 billion in OpenAI. Bloomberg News reported that OpenAI’s artificial-intelligence tool ChatGPT has lit up the Internet since its introduction in November, amassing more than 1 million users within days and touching off a fresh debate over the role of AI in the workplace.
AI now feels like the Internet in 1996 — full of promise, just in ways we do not know yet. But somehow I do not think we have spent decades developing AI only to use it to develop quizzes about animals.
Robert Burgess is the executive editor of Bloomberg Opinion. Previously, he was the global executive editor in charge of financial markets for Bloomberg News. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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