ChatGPT and AI fueled the bull market in stocks. What happens next?

I gave a noisy answer, but he did not hold back. “Think of something random and tell him to write a script. I asked to write a script about two monkeys.”

Half a year later, we’re way beyond monkeys writing scripts. Generative AI has been discussed in every corporate boardroom, has been the subject of lengthy congressional hearings, and has caused labor unrest in Hollywood.

The sudden advent of technology almost single-handedly motivated him

Nasdaq Composite:

Up 32% in 2023, the best six-month index since 1983.

That’s more than $5 trillion worth of value creation. And yet, when it comes to generative AI, I still feel stuck in the novelty phase. The rest of the world supposedly uses AI to write essays, code programs, and save humanity, but I personally haven’t found any effective uses for ChatGPT or its chat cousins, Bard from Alphabet (note: GOOGL) and Bing from Microsoft from (MSFT).

I keep coming back to chatbots hoping for inspiration, but instead I feel like a six-year-old looking at a graphing calculator.

I’m not used to keeping to myself when it comes to technology. I brought my high school newspaper to the World Wide Web when Mosaic was still the dominant browser. I waited in long lines for the first iPhones. People usually come to me for technical advice.

Maybe I’m just getting old. Or maybe we’re in another cycle of disillusionment, destined for disillusionment, akin to 3D printing, autonomous driving, blockchain, and most recently, the metaverse. All of these led to mini stock market bubbles before their promise faded or stalled.

I covered the meteoric rise of 3-D printing stocks Barony in 2014. There was a time when 3-D printers were poised to replace home builders or produce spare light bulbs from our living rooms.

In early 2014, market leader 3D Systems ( DDD ) announced a partnership with Hershey ( HSY ) in which 3-D printers will revolutionize candy; new technologies like 3-D printing as a way to take our timeless pastry treats into the future.”

There is nothing wrong with 3D printing or dreaming big. But nearly a decade later, 3-D printing is mostly known as additive manufacturing, and it’s industrially targeted applications. We also await the societal revolutions brought about by self-governance, blockchain, and the metaverse.

So forgive me for being skeptical of AI’s own game-changing powers, constant headlines, announcements, and huge stock market gains, though.

I’ve always been interested in our tendency to exceed the potential of technology. The consulting and research firm Gartner has found significant business in advising companies on that habit.

In 1995, Gartner analyst Jackie Fenn introduced the Hype Cycle, a now popular tool for tracking technology progress. Fenn took a literary approach to the stages of technology creation, which include the “Peak of Inflated Expectations,” the “Strike of Disappointment,” the “Slope of Enlightenment,” and the “Plateau of Productivity.”

At the time, wireless was still brand new, below peak expectations, and behind technologies like the Information Superhighway, virtual reality and video conferencing that had already peaked, according to Gartner.

“Most advanced technologies follow a predictable life cycle of temptation, frustration, realism, and ultimately productivity,” Fenn wrote in a 1995 post. “By tracking technology progress through the hype cycle, organizations can determine when technology maturity has reached a point compatible with their own risk tolerance.”

There is no doubt that companies, including mine, are currently having these very discussions about AI. The risk of missing out is huge, but there is also a significant risk of moving too soon at the expense of the current business.

Consider Facebook, which made a company bet on the metaverse by changing its name

Meta Platforms (META) in 2021. Founder and CEO Mark Zuckerberg is right on social media, but he’s extremely bullish on the imminent potential of virtual worlds.

Meta’s shares have fallen 71% in the 12 months since the name change. Since then, it has taken off in a big way, and Zuckerberg is more focused on cutting costs than on the metaverse.

Last week, I asked Gartner analyst and author Mark Ruskino Mastering the hip cycleoffer some historical perspective on the rise of AI.

“As humans, we’re attracted to novelty,” Ruskino says. “And we tell our friends, so there’s this kind of social contagion factor in the early stages … you get a spike in excitement. But what’s actually happening is that the number of people applying or using that thing is much slower.”

That disconnect drives the endless hype cycle. “There was social. Then there was mobile, and there was cloud, and there was blockchain. Now there’s AI. And it’s like waves coming at you at the beach. It feels repetitive.”

After talking to Ruskino, I felt a little more righteous about my current hype fatigue. “We just have an unusual combination,” he says. “This year we had the hype of generative artificial intelligence, hot off the metaverse last year.”

Raskino emphasized that the hype cycle is not a stock-picking tool, but I would argue that the story is informative for investors. “Most often, but not always, the plateau in productivity or profitability is not as high as the initial peak of excitement,” he says.

What about the exceptions? He pointed to web search and software-as-a-service or cloud-based applications.

Where will ChatGPT land? Check back with me in 10 years. Let’s hope it doesn’t write this column.

Speaking of dashed tech dreams, earlier this month I got an email from Google saying it was pulling the SNY channel, home of the New York Mets, from YouTube TV, which I’ve been using since cutting the Verizon Fios cord. Since. the epidemic.

YouTube TV basically looks like cable, except that it’s delivered over the Internet to any smartphone, laptop, or smart TV. It’s more convenient than cable TV and a little cheaper. At least that was the initial promise of Google, Hulu, DirecTV and other virtual cable providers.

The services presented themselves as a more advanced version of television. There were no contracts, reducing the many years of commitment cable often required.

But economics never worked. Television content is expensive, especially sports. According to Bloomberg Intelligence, ESPN charges cable providers more than $10 per subscriber. Either this is passed on to consumers or the supplier eats the cost.

Of course, as Google and other tech companies emphasize profits, virtual cable packages have become more expensive and less convenient. I now pay $73 a month for YouTube TV, up from $50 in 2020. During that time I got less waves.

When SNY goes out, I’ll miss most Mets games. YES, the Yankees cable network has been removed from YouTube TV in 2020. As of July, New York City subscribers will not be able to watch any of their Major League Baseball teams on most nights.

In its email update, Google said Mets fans can “continue to watch select national Mets games on FOX, ESPN and TBS, all available through our Base Plan.”

That’s a far cry from YouTube TV’s message at launch. “While what we watch on TV seems to get better every year, the way we watch TV never changes,” Google said in 2017. “When will we be able to get the channels we care about at a price we can afford? , without all the obligations, equipment fees and hassles. Answer? Today.”

But, apparently, not tomorrow.

Technology and the advent of streaming have ultimately made TV much more challenging. A colleague of mine points to a recent five-day stretch in which Yankees fans, including himself, needed four different subscriptions to watch games: cable (via YES), Apple TV+, NBC’s Peacock and Amazon Prime Video.

The latest TV mess is a reminder to investors, consumers and media executives. technology has brought enormous improvements to our lives, but progress is not inevitable.

Write Alex Eule at alex.eule@barrons.com