Will the artificial intelligence bubble burst?

Three years after ChatGPT, AI is revolutionizing everything and sending markets into a frenzy: sustainable innovation, guaranteed volatility. By Xavier Comtesse & Pascal Eichenberger

An article available in AGEFI: https://agefi.com/actualites/opinions/la-bulle-de-lintelligence-artificielle-explosera-t-elle

Three years ago, the revolution of large language models (LLMs) began. On November 30, 2022, OpenAI launched ChatGPT. Suddenly, everyone watched in astonishment as statistical algorithms, which calculated the probability of the next word, began generating billions of relevant texts and initiating meaningful dialogues. But not only in everyday life, also in architecture, civil engineering, medicine, pharmaceuticals, education, forecasting, finance, industry, and more.

The power of computers was about to become accessible through natural language. A new revolution was beginning. And what a revolution it was! Perhaps the mother of all revolutions, since it contained within it the potential for machine language to transcend humanity.

Today, financial markets are in turmoil. The stock market valuations of tech giants are reaching record highs. Should they sell? Which company will go under? Which company will emerge victorious from this tsunami? Are we on the verge of a bubble bursting?

Certainly, times are turbulent in the stock market. But make no mistake, the innovation of artificial intelligence (AI) is here to stay. Immense developments are still to come. Remember, the wheel was invented over 5,000 years ago in Mesopotamia, and yet wheels on suitcases only became popular in airports at the dawn of the 21st century . That says it all!

For investors, the game is about "picking the winner" and not yet about "casing out".

Xavier Comtesse and Pascal Eichenberger

Returning to the stock market, the main argument against the bursting of the AI bubble rests on the fact that the major players in American tech are also the most profitable companies. Large margins, large market capitalization—what could be more natural in the world of finance?

The main argument in favor of the AI bubble bursting is that there is a lot of volatile money circulating, creating significant entropy in the markets and therefore a propensity for very high and very low stock prices. Market nervousness is therefore likely to persist for several more months.

Thus, in the short term, investors' hearts are racing. This is normal; the volatility resulting from the introduction of a horizontal and transformative technology is expected. But to manage business effectively, it's essential to look far ahead, to the long term. The potential of AI lies before us, particularly with the real world being traversed by autonomous vehicles (cars, trucks, trains, drones, etc.), agile, fast, and intelligent robots, and all sorts of other devices yet to be invented. The "magnificent seven" are the roots of a growing, not declining, forest.

The combination of bots (AI agents) and robots will soon bring about the culmination of an endless AI revolution. The future promises much more investment, and we are only at the beginning.

So it is still a time for investment, like in the days of railways, cars, television or telecommunications… the return on investment is for the day after tomorrow.

There will, of course, be both failures and successes; that's to be expected in such a period. For investors, the game is about "picking the winner," not yet about "cashing out."

*Bots and Robots, collective book, 2025, Georg edition, 240 pages, 25 francs.

By Xavier Comtesse and Pascal Eichenberger