Investors headed for the exits as they realize they had been had. Mainstream media decided to push more AI hype in response.
Last week, AI stocks saw some of their over-inflated value leak out. While it was by no means catastrophic for the AI hype industry, but in a testament to how massive the AI bubble is, it was responsible for completely dragging down multiple main stock market indexes.
In the months leading to air being let out, these companies were telling potential investors that we are in the midst of a massive new industrial revolution and that massive boom times are still ahead. This by both directly telling those prospective investors that they are a once in a generation investment opportunity and pushing their hype to a highly gullible mainstream media who will pretty much believe anything those companies tell them, no questions asked. Having an incredibly stupid mainstream media who are at the edge of their seat willing to scream about how amazing things are in the industry for you is an incredibly powerful asset to have. This is because there is no shortage of people who said that if they heard it on TV, then it must be true.
Of course, you can only lead a huge volume of investors on a hype train for so long before some of them start asking about a return on investment. There’s only so many times you can tell investors things like “just trust us, bro” and “returns are just around the corner!” before some of them start thinking that they have been scammed. That is exactly what happened last week when some investors finally said that they had enough and pulled their money. This lead to a massive drop in AI stocks and, consequently, dragged down whole indexes.
Now, we’ve seen this story before and, as such, we know exactly what tends to happen in these situations. Last year, we saw a massive drop in NVidia share prices. At the time, we had actively wondered if this marked the beginning of the AI bubble bursting. In response, the companies went running to the AI hype machines and laid their bullshit on thick.
To my personal amazement, the companies managed to talk their way out of the potential bubble bursting as the stock values recovered after. The concerns, naturally, persisted, but the bubble managed to reinflate following the massive hype campaign.
While the fundamentals continue to not remain sound, the AI bubble continues to depend on the hype that they generate. This cycle of sudden drop followed by AI hype and a recovery appears to be on the verge of repeating. Mainstream media has started pushing a whole bunch of AI hype all of a sudden. From CNN:
Chipmaker Nvidia posted yet another blockbuster earnings report this month.
The stock fell anyway, as many investors worry that the market is in the middle of an about-to-burst AI bubble.
But for AI’s biggest believers, the report was just another sign that the industry’s train isn’t running out of steam anytime soon.
Chipmaker Nvidia posted yet another blockbuster earnings report this month.
The stock fell anyway, as many investors worry that the market is in the middle of an about-to-burst AI bubble.
But for AI’s biggest believers, the report was just another sign that the industry’s train isn’t running out of steam anytime soon.
“Fears of an AI Bubble are way overstated in our view,” Wedbush analyst Dan Ives wrote in a note last week. The Nvidia earnings report “is another validation point for the AI Revolution and (in) our view we are in the Top of the 3rd inning of this AI game .”
It wasn’t just CNN pushing AI hype, either. CNBC was also pushing a bunch of AI hype as well:
Massachusetts Institute of Technology on Wednesday released a study that found that artificial intelligence can already replace 11.7% of the U.S. labor market, or as much as $1.2 trillion in wages across finance, health care and professional services.
The study was conducted using a labor simulation tool called the Iceberg Index, which was created by MIT and Oak Ridge National Laboratory. The index simulates how 151 million U.S. workers interact across the country and how they are affected by AI and corresponding policy.
The Iceberg Index, which was announced earlier this year, offers a forward-looking view of how AI may reshape the labor market, not just in coastal tech hubs but across every state in the country. For lawmakers preparing billion-dollar reskilling and training investments, the index offers a detailed map of where disruption is forming down to the zip code.
Yes, you read that right, a study, based on a simulation, says that AI can replace over a 10th of a workforce. But hey, if it pumps up the AI hype, then it must be true, so why not lead with the headline “AI can already replace 11.7% of the U.S. workforce, MIT study finds”.
I mean, nevermind the fact that generative AI has long been a broken technology that isn’t going to get fixed any time soon, if ever, you just gotta believe, man!
It’s unclear if pushing AI hype will work a second time. Only time will tell on that one. Still, we’ve seen this sort of thing happen before. The only practical effect this has is that the longer the bubble popping gets delayed, the more destruction that will get unleashed once it finally bursts. So, the hope is that this hype push aided by a complicit media will fail. We’ll see what happens, though.
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