Preeti
Investing in a bundle of generative AI stocks has outperformed the market for the past 18 months, with the Generative AI Stock Index rising 85% in 2023. However, the advantage has narrowed in 2024, raising concerns about the future of generative AI stocks. The emergence of a killer app for generative AI is seen as crucial for sustaining the growth of these stocks. The generative AI value chain includes AI management consultants, software providers, cloud services, and hardware providers. Stock prices for these components varied in 2023 and 2024, with winners exceeding expectations and losers disappointing investors.
The lack of a compelling reason for the widespread adoption of generative AI, as demonstrated by Apple, could signal trouble for the industry. Companies are investing in generative AI due to fear of falling behind, but without a killer app, demand for generative AI products and services may decline. The pressure on CEOs to showcase how AI will transform their businesses is evident, with a record number of mentions of AI in investor conference calls. However, the fear of AI hallucinations damaging a company’s reputation is also a significant concern.
The high cost of building and operating AI chatbots, coupled with the need for a killer app to drive consumer adoption, suggests that the rapid rise in generative AI hardware stocks may slow down. The success or failure of the generative AI boom ultimately hinges on the emergence of a compelling killer app that drives widespread adoption and usage.
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Source link: https://www.forbes.com/sites/petercohan/2024/06/15/with-generative-ai-stocks-up-20-apple-searches-for-an-ai-killer-app/
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