Companies know investors have an appetite for all things artificial intelligence right now, and they’re eager to show off how they’re integrating the new tech into their businesses — or at least say they are. The Securities and Exchange Commission’s chair, Gary Gensler, recently warned about “AI washing,” or companies giving off a false impression that they’re using AI so they can amp up investors. And while some companies are simply exaggerating the tech they do legitimately use, others have taken it a step further. In March, the SEC settled charges against a pair of investment advisors that were accused of making “false and misleading statements” about how they’re using AI. The regulator said one of the firms, Delphia, claimed it used AI to “predict which companies and trends are about to make it big and invest in them before everyone else” when, in fact, it didn’t. The other, Global Predictions, falsely called itself the “first regulated AI financial advisor,” per the SEC. The firms agreed to pay a combined $400,000 in civil penalties without admitting or denying the SEC’s findings.
Most companies aren’t being accused of breaking the law with their AI chatter, but they’re definitely posturing around it. An analysis from Goldman Sachs found that 36% of S&P 500 companies mentioned AI in their fourth-quarter earnings calls, a record high. Businesses were just showing up at Nvidia’s little AI Woodstock event — a four-day AI conference held in an arena in San Jose, California — hoping to get some hiring halo effect from merely being in the chipmaker’s presence. As to how much there is there on many of these AI claims, well, there’s some hyperbole going on.
“There is a certain grandiosity to what is being discussed in terms of potential, and I think part of it is people don’t know if or when some of these things are going to be achievable,” Scott Kessler, the global sector lead of technology, media, and telecommunications at Third Bridge Group, said. “People are very excited, and rightly so in some cases, but these things aren’t going to happen overnight.”
There is a certain grandiosity to what is being discussed in terms of potential, and I think part of it is people don’t know if or when some of these things are going to be achievable.
While some companies are clearly just bolting on AI ideas to their existing businesses, even projects that are explicitly about developing the next wave of this tech are hitting stumbling blocks. Google’s Gemini rollout has been a mess amid criticism that it’s “woke” and biased and seemingly can’t decide whether Elon Musk is better or worse than Adolf Hitler. And while OpenAI’s ChatGPT generated a lot of buzz last year, it’s still got a tendency to make stuff up.
“The release of ChatGPT was a brilliant marketing campaign in some sense. It really worked very well. It completely mesmerized people,” said Daron Acemoglu, an institute professor of economics at MIT and a coauthor of the recently released “Power and Progress: Our 1000-Year Struggle Over Technology & Prosperity.” He said there were some “pretty impressive achievements” embedded in ChatGPT, which could be indicative of what’s possible, but OpenAI hyped up the product as much as possible to raise money, attract talent, and compete in the hypercompetitive tech industry.
Sam Altman, the CEO of OpenAI and the poster child/messiah for the AI industry still speaks about the tech in a nebulous, nonspecific, and, at times, overstated manner. As the tech writer Ed Zitron has noted, he’s said his kids have more AI friends than human friends and that the tech will replace almost everything marketing agencies do, among other eyebrow-raising claims. It’s not the case that Altman’s being disingenuous — it’s just that it’s not super clear what the present capabilities of the technology even truly are, let alone what they might be in the future, so making bold, concrete claims about the way it’s going to affect society seems presumptuous.
What is clear, however, is that there’s a belief that there’s a lot of money to be made, and overselling has become a near-constant of the AI landscape. While the semiconductor industry is seeing an enormous amount of demand on the infrastructure side of AI, not all companies in the arena are created equal. Companies such as Nvidia, AMD, and Broadcom are big winners, but then there are others out there “who want to be part of the story,” Angelo Zino, a senior industry analyst at CFRA Research, said. “The way they would kind of spin it is somewhere along the lines of, ‘We expect AI to be a huge beneficiary of our business, and we see increasing orders related to AI,’ and it might be some hard-disk-drive maker, which isn’t necessarily an AI play,” he said.
A lot of these companies are not yet showcasing exactly what type of revenue they’re getting from AI yet because it’s still so small.
Even the Big Tech companies that are really moving and shaking in AI are on shifty ground at times. Tech giants such as Google, Amazon, and Microsoft are telling sales executives to hold their horses on how they’re pitching their generative-AI capabilities to clients, The Information reported. Just because you layer AI into your offering doesn’t mean it’s actually helpful to your customers in a way that makes a significant portion of them willing to pay a lot for it. Take the example of Microsoft’s Copilot, which the company isn’t breaking out a ton of detail on, revenuewise, at the moment.
“A lot of these companies are not yet showcasing exactly what type of revenue they’re getting from AI yet because it’s still so small,” Zino said.
As for the nontech companies talking about AI, it’s hard to tell what exactly anyone means or what’s hope versus reality. I recently found myself in a conversation with a bank executive who touted her firm’s efforts in generative AI. When I pressed to find out what she was talking about, thinking it was something big, she told me they were figuring out how to use AI to help representatives in call centers look up information. That’s probably nice for newer employees who are trying to get the hang of things. However, it isn’t game-changing.
AI innovation is an important development. There are plenty of reasons to believe that this isn’t the dot-com bubble 2.0, or even crypto, and that this technology will have a meaningful, if yet undefined, impact. (Hopefully, not the one where it wipes out humanity.) But the financial incentives here make it easy and tempting to overstate things. For many companies and entrepreneurs in the space, their wildest AI dreams are dollar signs.
“There is some sort of a cascade that if you are not talking about integrating generative AI into your workflow somehow if you’re a medium to large company, you are sort of behind the times,” Acemoglu said. “And I think dreams of automation are never too far from the minds of many managers.”
It’s genuinely unclear what generative AI and what comes with it will bring, which is both unsettling and comforting. The hyperoptimistic and hyperpessimistic takes are likely wrong, meaning the truth will ultimately wind up being somewhere in the middle. But anyone who tells you they know exactly what is going on in AI and where it’s headed is lying.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.
