by Zain Jaffer
Unless you have been hiding under a rock, most likely you have heard of or even played around with the new Artificial Intelligence (AI) applications like Chat GPT, Microsoft Copilot, Google Gemini, and other AI applications that have sprouted up. News reports, talk shows, opinion makers now talk about Large Language Models (LLMs), Generative Pretrained Transformers (GPTs), and other developments in AI computer science.
Nvidia, a Silicon Valley based microchip company that makes Graphics Processing Units (GPUs) is now the darling of the US stock market, and has made its CEO Jensen Huang almost a household word, especially for stock investors.
Speaking as someone who started his first company at age 14 and whose mobile advertising company was acquired by private equity firm Blackstone in 2019 [https://www.blackstone.com/news/press/blackstone-closes-acquisition-of-vungle-a-leading-mobile-performance-marketing-platform/], I believe this AI trend is real and not hype. If you think about how we underestimated the impact of the Internet on traditional society when it first came out, magnify that misunderstanding on the impact by several times.
Sure AI underwent a few false starts over the past few decades, but the scientists and engineers who worked on it never stopped believing in it. Also, the availability of GPUs particularly from Nvidia was the enabling technology that made the processing of computationally intensive LLMs and GPT possible.
AI will definitely transform business. Many will get laid off, such as human call center agents, middle men, and other white collar workers who can already be replaced by AI.
For example, in February 2024, a company called Klarna announced the following results from testing its AI customer service chatbot. The Klarna AI assistant had 2.3 million conversations, two-thirds of Klarna’s customer service chats, the equivalent work of 700 full-time agents. They claim it is on par with human agents in customer satisfaction, more accurate in errand resolution, and saw a 25% drop in repeat inquiries. Customers resolved their concerns in less than two minutes compared to 11 minutes previously.
It can also communicate in more than 35 languages. Klarna estimates that their AI agent can drive a $40 million USD in profit improvement in 2024 [https://www.klarna.com/international/press/klarna-ai-assistant-handles-two-thirds-of-customer-service-chats-in-its-first-month/].
But it will also create new opportunities, such as prompt engineering to help AI get better through supervised training and learning. While it will further negatively impact the already fragile office commercial real estate market worldwide, particularly the Business Process Outsourcing (BPO) sector, it will also create opportunities for data centers and other infrastructure projects.
One business for example that has sprouted up is the renting/leasing of available GPU units globally by their owners by connecting their servers to the cloud, to make those compute resources available to small and medium sized companies who cannot just afford to buy the latest GPU systems. The latest Nvidia GPU, the Blackwell, is estimated by Huang to cost above $30,000. The demand far outstrips supply, and they cannot build these chips quick enough to satisfy it. Thus this business of leasing GPUs is expected to continue for a few years until the chipmaker builds enough capacity.
Obviously AI opens a can of worms in terms of disrupting the status quo. It has the potential to throw millions of people out of work globally if we do not plan for it in terms of training.
Realistically speaking there is really no way to create a one to one job match between those jobs that are lost and those that are created, and many will not be able to make the transition. We probably need to have some type of social safety net, but given the fact that pension funds globally are already stressed from low birth rates, lower working populations compared to retiree populations, that might not be practical.
All we can really do is prepare for the massive change that AI will bring to the social, political, cultural, economic, legal, financial, and business worlds.
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