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He wrote in a research note that investors should be wary
Insider’sreport of the "bubble-like euphoria" around AI.

on payments As I noted, bubbles aren't always bad. Back in the 1980s and
1990s fiber optic technology formed the basis of a bubble
involving telecommunication firms. That bubble burst but
left in its wake massive amounts of fiber optic cable still in
use today or waiting to be lit up.

Does AI have a And the dot-com bubble was the genesis of ecommerce, and
as has been documented, it soared during the pandemic
and continues to grow unabated. Late last year, Adobe
bubble problem? Analytics predicted online sales would near $22 billion just
in the 61 days between Nov. 1 and Dec. 31, 2023.

By Patti Murphy So, even if we're in the midst of an AI bubble, and even if
ProScribes Ink it bursts like most bubbles do, it's not the death knell for
AI technologies, or for payment initiatives that leverage AI.
may get blowback on this, but the way I see it we are
living through an AI bubble, and like other bubbles Promise and problems
before it, this one will burst. Before continuing, let's The public frenzy over AI began in late 2022 with the launch
I agree this is not necessarily bad news, and that arti- of ChatGPT, a chatbot heavily financed by Microsoft. It
ficial intelligence is not inherently bad. uses generative AI, similar to automated online customer
support chats, that can support text, images and other
Machine learning tools and other forms of AI have been media using training data and models.
used for generations, with success, for banking and
payments applications, including fraud prevention and The launch sparked an AI "arms race" of sorts, with big
detection. And there will be numerous opportunities tech companies upping their AI investments by billions of
for the technology to continue to make contributions to dollars and all tech companies angling to deliver new AI
banking and payments in 2024 and beyond. applications.
OpenAI, the company behind ChatGPT, was created in
But the seeming hysteria around AI: fears about how we're 2015 by a group of tech moguls, many of whom have since
going to lose our jobs to AI tools like chat bots; the money: moved on to other AI projects. On day one, the chatbot
private equity investments ballooning from $6.67 billion in claimed over a million users.
2015 to $47.4 billion in 2022, according to Goldman Sachs;
plus, the squabbles and jockeying for position among titans To what does ChatGPT owe its success? I posed that
of tech that seem to have more to do with ego than serious question to the chatbot itself. The answer was a bit long to
efforts at building out an AI industry—all these things give recount here, but these are a few highlights:
me pause.
• It is "trained on a diverse and extensive dataset
While they are prone to bursting, bubbles can bring collected from a wide range of sources on the
important advances. Some prominent companies were internet."
born during the dot-come bubble of the late 1990s and early
2000s. Amazon, eBay and Priceline are among them. • It is built on "transformer architecture," which uses
neural networks that can put data into context and
What made the dot-com and other bubbles burst was predict likely sequences of words in response to
indiscriminate investment strategies. Investors were prompts or queries.
seemingly throwing money at anything that leveraged this
new sales and delivery channel called the internet. The • OpenAI makes the technology available through
problem was that many of these companies burned through APIs, making it easy to integrate with applications
the cash with outsized salaries and cushy perks, but and services.
without real products that brought returns on investment.
The response included this caveat: "It's important to note
When the dot-com bubble burst, like so many before that while ChatGPT has achieved remarkable success, it
and after it, small fortunes made seemingly overnight also has limitations and may generate incorrect or biased
evaporated just as quickly. Back in August 2023, Edward responses in certain situations."
Stanley, head of thematic research at Morgan Stanley,
suggested a similar outcome could await AI. After all, the internet, which ChatGPT scours for
information, is filled with misinformation. Mistakes are a
given.
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