The AI bubble?

As someone who recruits for companies across the UK with a real passion for Data & AI, it’s always strange to hear people talking about how the bubble is about to burst.

What does it mean and why should we bother?

The explosion in all things AI over the last few years has been amazing to see. Whether it’s the seismic impact of Chat GPT at the end of November 2022, the subsequent gold rush for market share or the spinning up of all types of companies in all kinds of sectors, it truly has been a remarkable change for all of us.
The current nervousness in global markets about the valuations of tech companies focussing on AI is palpable with talk of an imminent bursting of the AI bubble being a real possibility. Silicon Valley and the tech world is renowned for vast overvaluations and often I think its linked to ego & bravado (i.e. Meta have X number of engineers so Google new Y number of engineers).

That said the implications of any bubble bursting will be far reaching and not without risk even in the UK.

In essence, a bubble bursting is a sudden transition from a contained, ordered structure to a dispersed, chaotic state as energy is released and dissipated.

What happens if it bursts?

An AI bubble burst would result in stock prices crashing, venture capital pulling back from investments in that sector meaning significant challenges for start-ups and significant layoffs and consolidation, and the big boys would buy up the startups. Also, an impact of any major burst would be much slower R&D investments, perhaps a more focused return on other forms of practical AI with sustainable, ethical and cost saving AI applications as opposed to the flashy ‘lets AI everything’ way of today.

In the UK it could mean shifting of resources and unemployment as people change their tack on investing in AI and Agents. Some of the companies I talk to are investing heavily in proof of concepts and investigation of meaningful use cases but with no real sense of ROI. Perhaps a bubble bursting would mean that only cost saving, productivity improvement AI projects would get the go ahead until the market recovers.

In reality the genie is out of the bottle and whilst the VC community and tech entrepreneurs are desperate for huge valuations and exits, for most companies across the world we are all using AI day to day for a raft of different reasons and benefits.

At Change Digital, I use AI daily for summaries of market insights, business development, providing customer value in terms of research or reporting, small tasks that can be automated easily and investigating new skillsets and specialisms to support me as a tech recruiter. That will not go away, and whether AI simply becomes a meaningful tool as part of your laptop or phone or a much more seismic agentic system making everyday decisions for you for years to come, its clear that AI is here to stay irrespective of the bubble!

Gary Simpson

Principal Consultant

Originally posted on Change Digital's website here.