Speculation about AI’s implications for society has reached a fever pitch. While OpenAI co-founder Sam Altman speaks of a future of radical abundance, others, including another OpenAI co-founder, Ilya Sutskever, warn of existential risks. Meanwhile, economists continue to debate whether AI will usher in unprecedented prosperity or widespread unemployment.
What are we to make of such wildly divergent predictions? While we cannot know which future will materialize, we can examine what those with “skin in the game” believe will happen. Financial markets aggregate the views of a multitude of sophisticated investors who are risking money on their convictions. If they genuinely thought AI might transform the economy, this should be reflected in asset prices.
In some respects, the market has certainly delivered a clear signal. Nvidia’s market capitalization has soared past $4 trillion as Microsoft, Google, Amazon and other tech giants invest hundreds of billions annually in AI infrastructure. AI firms’ sky-high valuations suggest that investors expect enormous profits.
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