Will the Artificial Intelligence Bubble Burst Soon? Experts Weigh In

• Morgan Stanley argues that the AI bubble is closing its peak and asks investors to be wary.
• Alibaba, the e-commerce company, claims its efforts to ramp up AI training have been impeded by the shortage of key components.
• Israeli Prime Minister Benjamin Netanyahu says they are developing programs to make Israel one of the three top AI powers in the world.

Numerous exciting updates have popped up in the AI space over the past week. This week, the focus in this emerging sector has been on investor enthusiasm starting to fizzle out. Morgan Stanley, the financial services company, has claimed that the AI bubble is closing its peak.

Edward Stanley, head of thematic research at Morgan Stanley, claims investors should be more careful when investing in AI and be wary of the “bubble-like euphoria.” The analyst also compared the excitement around AI to the market bubbles that arose and burst in the 70s. “History has shown that for multiyear themes, there is usually little need for investors to rush in,” said the researcher.

Stanley added that the euphoric rise in AI stocks merged with a recent decline in the release of AI products, could mean that caution from investors is needed in the second half of the year.

Meanwhile, in China, Alibaba, the multinational technology company, has complained about constraints as the nation ramps up AI training. The e-commerce giant says its progress in AI is being restricted by a shortage of key components such as relevant chips. They believe that this shortage could undermine China’s efforts to keep pace with the US in the race for AI dominance. Notably, the U.S. recently banned China from buying tech firm Nvidia’s advanced chips.

Daniel Zhang, Chairman and Chief Executive Officer at Alibaba, revelated that in the past quarter, they had garnered increased demand for AI model training and related services. However, they could only partially fulfill these requirements because of supply chain constraints globally.

Various other nations are also scaling their AI efforts. In a recent interview with Bloomberg, Israeli Prime Minister Benjamin Netanyahu was quoted saying, “What I’m organizing is a government policy and a government board with money to make Israel one of the three top AI powers in the world.”