AI’s Hype Correction Is a Healthy Pause for Breath
Businesses are becoming more rigorous about how they measure success, suggesting lessons have been learned from the dotcom boom and bust.
Putting on the brakes.
Photographer: Marlena Sloss/Bloomberg
Is generative AI worth the money? Technology leaders like Microsoft Corp. Chief Technology Officer Kevin Scott says costs will come down and capabilities improve, but as Wall Street heads toward correction territory — Nvidia Corp. and Microsoft, two stocks that have ridden the AI wave, are down more than 15% and 8% respectively since July 10 — enterprises are grappling with a deeper problem: How do they put AI to use and measure the return on that investment?
Confusion around the answer has led to a growing malaise in recent months, sparked by bearish reports from Goldman Sachs Group Inc. and Sequoia Capital questioning whether “genAI” will make as much money as the market seems to think. AI capital expenditure will reach between $600 billion and $1 trillion in the coming years, the two reports estimate, and spending on information technology will rise 8% this year, according to a prediction from Gartner Inc.