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Big Tech says AI is booming. Wall Street is starting to see a bubble

The industry has rushed head-long into AI, and stock market investors are following them. But a growing group of Wall Street analysts are skeptical profitability.

“Despite its expensive price tag, the technology is nowhere near where it needs to be in order to be useful,” Jim Covello, Goldman Sachs’s most senior stock analyst and a 30-year veteran of covering tech companies, said in a recent report about AI. The tech industry would need to generate around $600 billion in revenue a year to make up for all the money being invested in AI right now, yet it is far from close to that number, David Cahn, a partner at venture firm Sequoia Capital, wrote in a blog post last month. Bigger companies like Google and Microsoft will be able to keep spending money until demand for AI products increases, but smaller start-ups that have taken on a lot of venture capital might not survive the transition, Jain said.

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