Will War in the East burst the AI bubble?
I’m just speculating on this, but I do have a question, which is: Will one of the consequences of the conflict across the Middle East be that the Gulf economies are sufficiently disrupted to slow the flood of capital into the AI industry?
Think different
Further, if that investment does slow down, what will the impact be? Will some of those already over-leveraged AI companies fold? What happens when the rich investors, so many of whom come from that region, choose to take money out of those investments because they need to use the capital elsewhere, such as for repairing damaged infrastructure in the event the wars do reach some kind of end?
This begs a fresh observation.
Other than arms sales, AI is the only game in investment town at present. If we assume as so many now do that the financial market is some kind of weird Ponzi scheme, then it’s going to need constant money coming in. If that money flow stops from some reason, other parts of that system also slow down. That’s what happens, of course, so what might the broader impacts of a pull-back in AI investment be?
Ai running costs are already high
AI also needs a different kind of power. It needs energy, the cost of which is in the process of spiking in real time. We all know by now, surely that once those energy costs do rise, they won’t fall again for a while.
AI also needs data centers, and the bombing of an Amazon AWS center has already had a discernible impact on stock volatility. Sure, what happens next is that data centers move elsewhere, but at what cost? More to the point, to what extent does shifting AI data centers to different regions impact data sovereignty. Even if it doesn’t, this makes for added cost.
The endgame I can see here is that data centres get more expensive, energy gets more expensive, investment dollars slow down, and that’s even before one of the antagonists in the conflict cuts the subsea cables.
None of these seem to me to be good things.
Boom, boom, and bust
All of these things seem likely to accelerate the inevitable collapse of the AI bubble, and that can only make for further economic misery just as every collapsing boom cycle ever has throughout history.
That’s going to make for a bunch of M&A activity across the industry, and is likely going to be a great opportunity for any well financed company *cough, Apple* to acquire critically important entities in that space.
(If you have money, you’ll probably find a way to make money in that collapse, but the rest of us have less opportunity, which is why if you’ve read this far, I’d like to remind you that I’m always grateful for a contribution to my Kofi).
Signing off, I suppose what I’m saying is that I predict the impact on tech of this conflict will be far greater than the closure of a couple of Apple retail stores, and I’m not at all certain we’ve sufficiently considered what those consequences might be.
I’m hoping other tech writers who may sometimes read my stuff will use some of their own resources to help identity and guide us through whatever comes next, because it feels likely to be bumpy.
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