The debate over AI's potential continues, with Stability AI CEO Emad Mostaque calling it the "biggest bubble of all time" and saying it's not yet ready for widespread adoption.
Speaking to UBS analysts last week, Stability AI CEO Emad Mostaque described the technology as a potential "$1 trillion investment opportunity" in the long term, but also the potential "biggest bubble of all time," stressing that it is still in its early stages and not ready for widespread adoption, especially in high-security sectors such as banking.
"I call it the 'dot AI' bubble, and it hasn't even started yet," Mostaque said.
Generative AI is gaining popularity, but is it ready for the financial world?
Stability AI is the driving force behind Stable Diffusion, an AI tool that rivals OpenAI's DALL-E 2 or Midjourney. With its ability to generate photorealistic or illustrative images from text, Stable Diffusion has attracted over one million users and raised over $100 million from investors.
Despite the growing popularity of AI in many sectors and its promising capabilities, Mostaque cautioned that the technology is not ready for significant investment. He singles out financial services, where he believes large-scale implementation is "not quite ready" for safety reasons, even though the "value is already in sight."
Banks like UBS need to adopt AI because it's a "massive market" and "more important than 5G as an infrastructure for knowledge," Mostaque said. He believes the total investment needed for AI could be as high as $1 trillion.
Mostaque predicts dire consequences for companies that don't use AI wisely - the stock market will "punish" them. He cites how Google lost $100 billion in a single day after inaccuracies caused by its Bard AI chatbot were exposed in a presentation.
Mostaque believes that while there may not be many opportunities to invest in this growing technology right now, the scenario will change dramatically in the near future. Companies that use AI to increase their revenues and profits can expect the market to reward them accordingly.
"I think this is real. I think that there aren’t many investable opportunities here, and you’ll see people moving from the best chip manufacturers to companies that are using this to impact their bottom line and their top line appropriately. And you will see the market punishing those that don’t use this," Mostaque said.
How to crack the black box of AI
Some companies are trying to develop specific AI solutions for the financial market, such as German AI startup Aleph Alpha's Explainable AI approach. It is based on AtMan, an XAI method introduced in early 2023 by researchers from Aleph Alpha, TU Darmstadt, the Hessian.AI research center, and the German Research Center for Artificial Intelligence (DFKI).
Bloomberg introduced its LLM for financial tasks with BloombergGPT, trained on its own data, and FinGPT is a financial AI framework designed to use an automated pipeline of curated, high-quality financial data and then process it with powerful LLMs from well-known companies or open-source solutions.