Global Intel Hub -- Knoxville, TN -- For the past 2 years or so, most new investment in private markets has went into AI names or their derivatives, with a few notable exceptions (SpaceX, etc.) - looking back it's time to see what the use of proceeds is and was on those investments and what has been achieved with that.  No doubt there is a lot of hope (hype?) for the future of AI, but what tangible technologies have we seen, if any?  What do the Wall St. lords think about AI investment, let's start with Goldman:

Here is how Goldman's Allison Nathan, author of the biweekly Top of Mind note, frames the prevailing AI dynamic:  The promise of generative AI technology to transform companies, industries, and societies continues to be touted, leading tech giants, other companies, and utilities to spend an estimated ~$1tn on capex in coming years, including significant investments in data centers, chips, other AI infrastructure, and the power grid. But this spending has little to show for it so far beyond reports of efficiency gains among developers. And even the stock of the company reaping the most benefits to date — Nvidia — has sharply corrected. We ask industry and economy specialists whether this large spend will ever pay off in terms of AI benefits and returns, and explore the implications for economies, companies, and markets if it does, or if it doesn’t.

Content generation is clearly helpful but not a game changer (he's referencing 'efficiency') - having Chat GPT write your social media posts is helpful more for spammers than it is for real professionals.  In any event, we are now at a point where we are talking about cutting energy deals to fund AI data centers, for what?  What is the economic output of AI?

Then you have the obvious economic paradox, during the .com boom which fueled the internet, Big Tech developed cheap technology to solve big expensive problems.  AI is big and expensive tech to solve cheap / common problems.  Does anyone see the problem here?  Well, at least some well paid and well fed Goldman folk do, at least behind closed doors:

It goes worse: according to Goldman's Head of Global Equity Research Jim Covello, to earn an adequate return on the ~$1tn
estimated cost of developing and running AI technology, it must be able to solve complex problems, which, he correctly says, it isn’t built to do. He also points out that truly life-changing inventions like the internet enabled low-cost solutions to disrupt high-cost solutions even in its infancy, unlike costly AI tech today. And he’s skeptical that AI’s costs will ever decline enough to make automating a large share of tasks affordable given the high starting point as well as the complexity of building critical inputs—like GPU chips—which may prevent competition. 

The skeptics are coming out of the woodwork, but of course they've always been there.  There isn't a shortage of skeptics, but the problem is with all the marketing push to fuel the AI bubble, those voices are drowned out in the drumbeats of potential applications in sectors lagging behind the times, such as War, Inc. - Big Pharma, and others.  The Oil industry is happy to support AI as they very well know those expensive GPUs aren't going to get enough juice from the winds blowing through Coldwater Canyon.

The truth is that the military has used AI since the 1960s and Wall St. has been using it since the 1990s with few real applications, it was abandoned in favor of other development agendas.  Boomers will likely remember "Hal" the AI computer from Stanley Kubricks 2001 A Space Odyssey:

1968: “I’m sorry Dave I’m afraid I can’t do that”

2022: “I'm sorry, but I am a language model trained by OpenAI”

The military works with Big Tech on thousands of fronts, a topic for another article, and they also play both sides with InQTel, the Venture Capital division of the Deep State.  Notably, through "Research Labs" the US Military drip feeds advanced technologies to Big Tech namely companies like Apple, Microsoft, previously Xerox, Sun Microsystems, which ultimately filters down to people's 401ks, so in this way they can justify a massive black budget, pointless wars, underground lux bunkers and other wasteful items on the budget.

Nonetheless, AI is one of many technologies drip fed by the US Military Industrial Complex but there's no question that when it's released to companies like Open AI and others it's watered down, there are back doors, and it doesn't have the same value as the original seed that was started more than 60 years ago.

AI like a concept is certainly not bad, and it's likely that AI is prevalent in the Universe of Intelligent Life.  However, this current iteration of AI as it's being packaged, sold, and delivered is as useless as a bridge to no where, which may have excellent structural engineering but it's functionally pointless.  Is that harsh?  Prove the thesis wrong, outside of content creation & generation show one major accomplishment that is exclusively born from AI.

Is the US Military itself an organization run by AI for more than 40 years?  That's an article we penned years ago:

Darpa has invested billions upon billions of dollars in thousands of technologies, including but not limited to AI.  The stuff they have now, if we wrote about it, people simply would think it's science fiction.  But if we just look at the computing power they have available to them compared with 10 years ago, we can get a sense of how powerful this AI really is.  But what is scary, this intelligent system, we call the US military, it is a weaponized system.  And to make it more scary, much of the weaponization is being automated via software automation, robotics, and other automation systems.  Fortunately for now, the intelligent system needs human society to further develop this system - but that may not always be the case.  Triggering a nuclear war could end human life on the planet by 90% or 99% allowing only a few scientist survivors to be their robo-slaves fine tuning the last parts needed before they could recreate human slaves so they wouldn't need us at all.  

How many narratives are paid for advertising of the "Deep State" to further the AI agenda, from the perspective of this article, and the US Military?  Billions of dollars, using thousands of talking heads, bots, conspiracy theories (i.e. Flat Earth / Tartaria), trying to control the margins.. not the hardcore Preppers or the Robot Beurocrats, but the middle class, school teachers, lawyers, 'smart people' - they are the ones with their heads on the chopping blocks.  Thousands of fake narratives, waiting for one to catch you.

On the battlefield, things are definitely moving in a direction to prove that thesis, which is also the plot of Terminator 2, see this:

The recent boardroom drama over the leadership of OpenAI—the San Francisco–based tech startup behind the immensely popular ChatGPT computer program—has been described as a corporate power struggle, an ego-driven personality clash, and a strategic dispute over the release of more capable ChatGPT variants. It was all that and more, but at heart represented an unusually bitter fight between those company officials who favor unrestricted research on advanced forms of artificial intelligence (AI) and those who, fearing the potentially catastrophic outcomes of such endeavors, sought to slow the pace of AI development. 

We're not luddites we are actually technology buffs, geeks, engineers, hackers, and inventors - who share a common opinion about this AI boom.  It's all fake, it's lipstick on a pig - it's not a real "Boom" - and we believe that many of us including esteemed Zero Hedge readers, most smart people, can agree with that.  We would dare to say that many investors would agree with that too, given the sentiments we've heard.  For example, one investor representing a major EU family office said "We all know it's a bubble, but once Microsoft invested 10 Bn they are going to do everything to make sure that investment works, including throwing more capital and resources behind it, advertising, etc."

So it seems many investors are going in with their eyes open, however, it's always tricky knowing when to exit when the music stops.  At least in the case of NVIDIA, you can see an example that there's just only so high that a stock can go.  Private Market dynamics are a bit different, but we have seen most private AI companies fail, with the exception of xAI.

Checkout private companies for investment @ Venture Capital Cross - or on YT @ youtube.com/@VentureCapitalCross