MIT Economist Sounds Alarm On AI Hype: 'A Lot Of Money Is Going To Get Wasted'
Economist Daron Acemoglu of the Massachusetts Institute of Technology, has voiced his apprehensions regarding the ongoing surge in AI investments.
What Happened: Acemoglu expressed his concerns that the current enthusiasm for artificial intelligence is resulting in excessive financial commitments, in a Bloomberg interview on Thursday.
While not against AI, Acemoglu warns that only about 5% of jobs could be significantly affected by AI over the next decade. This is troubling for companies investing billions with expectations of a productivity boom.
He remarked, “A lot of money is going to get wasted,” stressing that the expected economic transformation is unlikely to arise from such a small percentage.
The economist has emerged as a significant voice cautioning against the AI frenzy that has taken hold of Wall Street and corporate America. Despite skepticism from some quarters, many investors continue to pay high premiums for stocks anticipated to benefit from AI advancements.
Why It Matters: The concerns raised by Acemoglu echo fears of a potential AI bubble burst, reminiscent of the dot-com bubble of the late 1990s. The surge in AI interest has driven U.S. stock markets to new heights, with the S&P 500 and Nasdaq Composite Index experiencing significant gains since late 2022.
Despite these fears, a recent analysis by Goldman Sachs suggests that the AI tech sector is not in a speculative bubble. However, they emphasize the importance of diversification, given the high concentration risk among leading tech companies, often referred to as the “Magnificent Seven.” The extraordinary performance of tech stocks in recent years has been justified by their earnings, according to Goldman strategist Peter Oppenheimer.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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