Market Watcher Warns AI Is "Useless" And Its Bubble Will Burst

There’s no avoiding the hype surrounding AI these days.

“If AI cannot be trusted…then AI is effectively, in my mind, useless.”

Promises of new developments like personal robot assistants and miracle cancer cures are ubiquitous as executives take every opportunity to emphasize their AI chops to enthusiastic investors—and slightly less enthusiastic consumers, Will Daniel reported for Fortune.

Not everyone has been blown away by the AI fanfare, however. James Ferguson, founding partner of the UK-based macroeconomic research firm MacroStrategy Partnership, fears investors’ AI exuberance has created a concentrated market bubble that’s reminiscent of the dot-com era.

“These historically end badly,” Ferguson told Bloomberg's Merryn Somerset Webb in the latest episode of the Merryn Talks Money podcast.

“So, anyone who's sort of a bit long in the tooth and has seen this sort of thing before is tempted to believe it'll end badly.”

The veteran analyst argued that hallucinations—large language models’ (LLMs) tendency to invent facts, sources, and more—may prove a more intractable problem than initially anticipated, leading AI to have far fewer viable applications.

“AI still remains, I would argue, completely unproven. And fake it till you make it may work in Silicon Valley, but for the rest of us, I think once bitten twice shy may be more appropriate for AI,” he said.

“If AI cannot be trusted…then AI is effectively, in my mind, useless.”