Financial discussion question: I’ve been watching the stock market indices flying, driven mainly by the AI trades: Nvidia, Intel, Micron—all the companies making the hardware on which AI systems run. And lots of AI companies are doing well. But what I’m not seeing is the case for the long-term profitability (or indeed, any profitability) for the companies that are creating the AI systems: ChatGPT, Gemini, Claude, and so on. Other than selling those programs to companies to use themselves to theoretically increase their efficiency (or to enable them to fire low-level workers), is there any real profit to be made in AI? An auto manufacturer makes and sells cars: there’s a clear product that will bring in profit, and there are clear add-ons and supplements that can increase that profit. A clothing manufacturer, ditto. Even the various software companies: give away an electronic game and sell in-app things. It may be fuzzy, but there’s a clearly defined product that can make money in a clearly defined manner with fairly clear parameters.

But when I look at internet-esque things which are given away for free, I think first of Google and the other search engines: they make their money through selling advertising. Ditto Facebook, Twitter, and all the others. Are we expecting the various AI engines to also be selling advertising? What is the income-making thing they’re going to be selling?

Or is the last several months of stock market gains nothing more than the AI bubble? The latest incarnation of Alan Greenspan’s Irrational Exuberance?

(Please note: this is not a request for the list of why AI is evil or how wonderful AI will be when it’s perfected. I’m looking at the business case for AI, if there is one, and if any of the money being thrown at it is rational, if it might logically anticipate a return of some sort.)