Meta CEO Mark Zuckerberg has made the rash decision to double-down on massive AI spending, pushing a cutesy AI-mascot and poaching tech industry veteran Chirantan Desai to run a new division pushing Meta’s AI onto corporate customers.
The company’s investors, however, appear to be running out of slack for Zuckerberg’s leash. Since Friday of last week, a large sell-off in Meta stocks shrunk his paper fortune by nearly $20 billion, after Goldman Sachs began raising doubts about the long-term viability of the company’s AI ambitions.
Zuckerberg’s temporary losses notwithstanding — Meta’s stock is still up more than 28 percent over the last month — it does raise the question as to how much capital will be made available to satisfy the tech industry’s pie-in-the-sky AI push, and whether it can ever achieve revenue that would offset it.
In addition to Goldman Sachs’ gloomy outlook for Meta, hyperscalers as a whole face what appears to be an insurmountable challenge in turning AI into a profitable venture. As Bloomberg reported, the major management consulting firm Bain and Co recently penned an analysis finding that the AI industry will need to reach an annual revenue of $6 trillion by 2031 if tech leaders continue along their current spend-happy trajectory.
Doing so will require leaps in technological progress the likes of which are unprecedented in the information age — well beyond past innovations embodied by world-changing consumer tech like smartphones, for instance.
If we take the cynical path and assume that the AI industry won’t be able to pull off this miracle, then any major tech firm currently doubling down — like Zuckerberg’s Meta — will have functionally spent the better part of the 2020s rigging up their own corporate noose.
As finance professor at the University of Pennsylvania’s Wharton School Jessica Wachter penned in her own analysis of the AI financial bubble, if the promised money shower “fails to materialize,” then future historians will look back on this moment as the “largest misallocation of capital in history.”
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