The Guardian view on a tech bubble going pop: AI pays the price for inflated expectations | Editorial

Investors may have got too excited about something they don't fully understand - and are now paying the price

Has the artificial intelligence bubble burst? The question has been on the lips of many this week as they have watched the stock market slide, with billions wiped off the value of technology companies that had boomed since the arrival of large language models. It was the economist Hyman Minsky who thought Wall Street encouraged too much risk and gulled investors into parting with cash for all the wrong reasons. The result was ruinous boom-and-bust cycles. His model began with displacement", which is when investors get excited about something they don't fully understand - something like AI.

Last year, OpenAI's ChatGPT chatbot got to 100 million users in two months. What follows displacement, according to Minsky, is boom, euphoria, profit-taking and panic. There's been a boom. It is reported that more than 200 AI startups globally are unicorns - meaning they're valued at $1bn or more.