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GO DEEPER: Is AI Another Dotcom Bubble Waiting To Burst?

Navigating the AI boom in Asia with insights from the dotcom era.

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8 months ago

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TL/DR:

  • The current AI boom in Asia shares similarities with the dotcom era, such as irrational exuberance, massive CAPEX, and transformative technologies.
  • Key differences include faster innovation, quality of companies, and AI’s ubiquity across industries.

Introduction: AI boom in Asia

  • The AI era is accelerated by cloud adoption, generative AI, and large language models like ChatGPT.
  • Hyperscalers’ CAPEX fuels AI growth, with more durable business models than dotcom companies.

Artificial Intelligence and AGI in Asia: Navigating the New Boom through the Lens of the Dotcom Era

Artificial intelligence (AI) and artificial general intelligence (AGI) are driving unprecedented growth and innovation across industries, particularly in Asia. As we witness this AI boom, many are drawing parallels with the dotcom era, raising questions about potential bubbles and crash scenarios. In this article, we’ll explore the similarities and differences between the two periods, focusing on examples from Asia to provide a rich and informative reading experience for a tech-savvy audience.

Irrational Exuberance 2.0 of a new Tech Boom

During the dotcom era, the phrase “irrational exuberance” was coined by Alan Greenspan to describe the unbridled enthusiasm and speculation in the stock market. Today, the AI boom has seen similar levels of excitement, with massive investments pouring into AI and AGI companies. However, the AI era is characterized by faster innovation and higher-quality companies leading the charge.

A Tale of Two Tech Booms: Dotcom vs. AI

The dotcom bubble was fueled by a series of events, such as the Telecommunications Act of 1996 and the Y2K phenomenon. Similarly, the AI boom has been accelerated by cloud adoption and the rise of generative AI, exemplified by the release of OpenAI’s ChatGPT. This language model has captured the world’s attention and is poised to impact every company, industry, and individual, much like the internet did.

Massive CAPEX: A Common Thread

One striking similarity between the two eras is the massive capital expenditure (CAPEX) driving their growth. During the dotcom era, public telcos invested heavily in building out the internet infrastructure. Today, hyperscalers like Amazon, Google, and Microsoft are pouring billions into CAPEX to support cloud and AI initiatives. In fact, Nvidia’s data center revenue was approximately equal to 50% of the hyperscalers’ CAPEX last quarter, indicating a significant investment in AI infrastructure.

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Differences Matter: Durability and Innovation

While there are similarities between the dotcom and AI eras, key differences set them apart. The AI boom is characterized by more durable business models, with hyperscale giants flush with cash, as opposed to dotcom companies drowning in debt. Additionally, the pace of innovation in the AI era is significantly faster, with technologies like large language models progressing rapidly.

AI and AGI in Asia: A Glimpse into the Future

Asia has emerged as a key player in the AI and AGI landscape, with companies and governments investing heavily in research and development. China, for example, has set its sights on becoming a world leader in AI by 2030. South Korea and Japan are also investing in AI to drive economic growth and improve public services.

Examples of AI and AGI applications in Asia include:

  • Alibaba’s City Brain: A smart traffic management system using AI to optimize traffic flow in Chinese cities.
  • Baidu’s Apollo: An open-source autonomous driving platform collaborating with companies across Asia.
  • SoftBank Robotics: Developing humanoid robots for various industries, including retail, hospitality, and healthcare.

Comment and Share on the AI boom in Asia:

Have you witnessed the impact of AI and AGI technologies in your region? How do you think the AI boom will unfold compared to the dotcom era? Share your thoughts in the comments below and don’t forget to subscribe for updates on AI and AGI developments in Asia and beyond.

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