AI Could Bring ‘The Biggest Bubble of All Time’, Says Stable Diffusion Creator

Emad Mostaque, CEO of Stability AI, warns that the rapidly-expanding artificial intelligence industry could be headed for a major bubble.

“I think this will be the biggest bubble of all time,” Mostaque predicted while speaking with UBS analysts last week.

Similar to the dot-com bubble of the late 90s, he said he expects excessive hype around AI to inflate stock prices far beyond reason.

“I call it the ‘dot AI’ bubble, and it hasn’t even started yet,” Mostaque warned, according to CNBC.

With the hype around AI growing at unprecedented levels, in other words, even crypto’s bubblicious reputation may finally be surpassed.

With AI dominating headlines, investors are salivating over the next big thing. Stability AI itself has attracted over $100 million from backers enthused by Stable Diffusion’s ability to conjure up striking photos from text prompts. The tool now boasts over one million users.

And Beyond Mostaque’s startup, AI applications have certainly pervaded our lives, from social media feeds to advanced industries like medicine, transportation, and finance.

Generative AI, in particular, is making a significant impact with tools such as OpenAI’s ChatGPT, Google Bard, MidJourney, and of course, Stability AI’s Stable Diffusion. As Decrypt previously reported, generative AI might contribute a staggering $4.4 trillion per year—and the AI industry as a whole could be worth up to $15.7 trillion by 2030.

Generative AI enables machines to generate fresh content like text, images or music based on patterns gleaned from data.

But Mostaque insists AI still has a long way to go.

“It’s not quite ready” for large-scale deployment in sectors like banking, he told analysts, despite the obvious “value” in it. Integrating AI safely into mission-critical systems will take more time.

Nonetheless, Mostaque remains upbeat on AI’s long-term potential, pegging the total investment needed at around $1 trillion. He believes AI could be “more important than 5G” in enabling access to knowledge. He said he also believes that people will run powerful AI models locally, and human coders will practically become obsolete in the near future.

Mostaque predicted dire stock market consequences for companies that don’t embrace AI appropriately.

“You’ll see the market punishing those that don’t use this,” he said, citing how Google’s parent company Alphabet lost $100 billion in a single day after glitches in its Bard chatbot came to light.

With AI heavyweights like Google, Microsoft, and Elon Musk’s newborn X.AI all aggressively pursuing dominance in generative AI, expectations are undoubtedly inflated.

But Mostaque cautions bankers like UBS against immediately integrating tools like ChatGPT into business processes. While acknowledging the massive opportunity, he believes companies should approach AI investment prudently.

Riding the waves of hype through bubbly peaks and troughs is nothing new in tech—and certainly not new in crypto. Mostaque reminds us to buckle up and prepare for a potentially bumpy ride into the ‘Dot AI’ era.