A week or so ago, investment banking firm Goldman Sachs put out a report titled "Gen AI: Too Much Spend, Too Little Benefit?"
In it, they speculate about the future of AI - and they're very anxious about it. They find that it has yet to show even the slightest hint that it will be profitable - or even useful.
And as an investment bank, they don't give a crap about anything other than making money for their clients. So if they are skeptical of AI - they have to be taken seriously.
Edward Zitron read that 31-page report so you don't have to:
All the following passages from his commentary at
https://www.wheresyoured.at/pop-culture/ (emphases in original)
...what does "more[powerful]" actually mean? While one might argue that it'll mean faster generative processes, there really is no barometer for what "better" looks like, and perhaps that's why ChatGPT, Claude and other LLMs have yet to take a leap beyond being able to generate stuff. Anthropic's Claude LLM might be "best-in-class," but that only means that it's faster and more accurate, which is
cool but not
the future or
revolutionary or even necessarily
good.
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All of this excitement, every second of breathless hype has been built on this idea that the artificial intelligence industry – led by generative AI – will somehow revolutionize everything from robotics to the supply chain, despite the fact that generative AI
is not actually going to solve these problems because it isn't built to do so.--
The reason I'm suddenly bringing up superintelligences — or AGI (artificial general intelligence) — is because throughout every defense of generative AI is a deliberate attempt to get around the problem that
generative AI doesn't really automate many tasks. While it's good at generating answers or creating things based on a
request, there's no real interaction with the task, or the person giving it the task, or consideration of what the task needs at all — just the abstraction of "thing said" to "output generated."
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The most fascinating part of the report (page 10) is an interview with Jim Covello, Goldman Sachs' Head of Global Equity Research. Covello isn't a name you'll have heard unless you are, for whatever reason, a big semiconductor-head, but he's consistently been on the right side of history, named as the top semiconductor analyst by II Research
for years, successfully catching the downturn in fundamentals in multiple major chip firms far before others did....
Covello believes that the combined expenditure of all parts of the generative AI boom — data centers, utilities and applications — will cost a trillion dollars in the next several years alone, and asks one very simple question: "what trillion dollar problem will AI solve?" He notes that "replacing low-wage jobs with tremendously costly technology is basically the polar opposite of the prior technology transitions [he's] witnessed in the last thirty years."
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Being able to access information faster might make you better at your job, but that's efficiency rather than allowing you to do something new. Generative AI isn't creating new jobs, it isn't creating
new ways to do your job, and it isn't making anybody any money — and the path to boosting revenues is unclear.
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....one theme brought up repeatedly is the idea that
America's power grid is literally not ready for generative AI. In an interview former Microsoft VP of Energy Brian Janous (page 15), the report details numerous nightmarish problems that the growth of generative AI is causing to the power grid, such as:
* Hyperscalers like Microsoft, Amazon and Google have increased their power demands from a few hundred megawatts in the early 2010s to a few gigawatts by 2030, enough to power multiple American cities.
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Even Goldman Sachs, when describing the efficiency benefits of AI, added that while it was able to create an AI that updated historical data in its company models more quickly than doing so manually, it cost six times as much to do so.
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I feel a little crazy every time I write one of these pieces, because it's patently ridiculous. Generative AI is unprofitable, unsustainable, and fundamentally limited in what it can do thanks to the fact that it's probabilistically generating an answer. It's been eighteen months since this bubble inflated, and since then very little has actually happened involving technology doing new stuff, just an iterative exploration of the very clear limits of what an AI model that generates answers can produce, with the answer being "something that is, at times, sort of good."
It's obvious. It's well-documented. Generative AI costs far too much, isn't getting cheaper, uses too much power, and doesn't do enough to justify its existence. There are no killer apps, and no killer apps on the horizon. And there are no answers.