Goldman Sachs: AI Is overhyped, expensive, and unreliable

https://www.404media.co/goldman-sachs-ai-is-overhyped-wildly-expensive-and-unreliable/

by mrzool • 2 years ago

133 146 2 years ago

404media.co

gnabgib• 2 years ago

Discussions

(88 points, 12 days ago, 157 comments) https://news.ycombinator.com/item?id=40837081

(89 points, 1 week ago, 47 comments) https://news.ycombinator.com/item?id=40885632

unstatusthequo• 2 years ago

Also Goldman Sachs: uses quant algorithms for high speed trading at scale.

What a joke.

drewcoo• 2 years ago

There is no contradiction in that.

I'd like to see the quants that are using ChatGPT for HFT. Apples and oranges.

TeaBrain2• 2 years ago

The existence of sophisticated algorithms does not necessarily imply the existence of machine learning/"AI". Despite Rentech executing all their trades via algorithmic models, Jim Simons once said that they didn't use any machine learning.

johnthewise• 2 years ago

https://youtu.be/X72PZ_tQ4cA?si=Mj-w9iXFO4CCTCj0&t=78 I think he says the opposite.

pie420• 2 years ago

Goldman Sachs has no reason to disseminate valuable market insights and analysis for free. All financial thinkpieces by investment firms should be disregarded as economic manipulation and propaganda

sojournerc2• 2 years ago

They do have an interest in accurate pricing in markets (as does any investor). Sometimes something can be both true and have a portion of self-interest. An organization of that size might know something you don't.

Do you have information they don't? Can you show that LLM tools are worthy of the hype (investment in particular), are consistent, and reliable? That's certainly not my experience.

It's worth saying the emperor has no clothes, especially if we want to avoid the bubble pop, which admittedly GS has an interest in.

singleshot_• 2 years ago

Incomplete understanding of GS’s business and why someone might want to do business with them.

ohxh• 2 years ago

Or maybe they do believe this, and entered into trades to express this sentiment. Now, they need the market to correct to what (they believe) is accurate, so they can take profits and free up their capital again.

bostonsre• 2 years ago

They don't have an incentive to share their view of reality until after they make investments that would capitalize on their belief in that view of reality. After they take those positions though, it is in their best interest to inform everyone about what they view to be real. It would seem to be risky for them to try to take positions based on some false narrative on some aspect of the market because if someone else finds and publishes the true narrative, and that becomes the prevailing sentiment, they would be harmed.

jjtheblunt• 2 years ago

do you mean something like generalized front running, where they see imminent happenings, get there first, and in this case dissuade competition?

impulser_• 2 years ago

I think you are vastly misunderstanding the role of investments banks. I think you might be confusing them with Hedge Funds.

ramon156• 2 years ago

News flash, stock related company says thing to influence market

93po2• 2 years ago

news flash, 155 year old company (that has never meaningfully innovated anything and is run by a 62 year old man with zero experience outside finance) is resistant and pessimistic about technology

tedsanders• 2 years ago

Goldman is correct that AI is expensive and unreliable.

But it's only overhyped if AI stays that way.

The hype isn't coming from where AI is today, but where it will be in 2030 and 2040.

What excites the true believers is the slope, not the intercept.

swatcoder• 2 years ago

That's not a very interesting opportunity for insitutional investors (hedge funds, banks, pensions, etc). They have the resources and confidence to move fast and cleverly and don't need to make big bets on far off possibilities. They have better things to do with their money in the meantime.

The nearly $1T in investment hype since Q42022 was chasing the possibility that revolutionary commercialization of generative AI might arrive any day. That no longer seems likely.

As you note, there seem to be at least a few more profound discoveries that need to be made and matured, and so that revolution is still a long way out (from the perspective of these investors), even if it looks meaningfully more possible than it did two years ago.

Davidzheng10• 2 years ago

What is far off for you? Is it five years?

xk_id3• 2 years ago

“Over an arbitrarily long timeline, assuming stable geopolitical conditions, technology will continue to improve, at an arbitrary rate”. What a groundbreaking insight, no wonder people are excited.

elevatedastalt2• 2 years ago

The slope has changed between 10 years and ago.

You are free to disagree, but don't pretend like you don't understand what the AI crowd is saying.

brigadier1323• 2 years ago

Did you even look at the Wright brothers plane? Why are people excited about it? It's an expensive deathtrap!

tim3333• 2 years ago

That's not the hype you are looking for.

It's more that by 2040 AI/robots will be considerably smarter than humans and we can kick back while they build us palaces and yachts. Not that that will definitely happen but it's not a business as usual scenario.

_heimdall2• 2 years ago

The hype follows what OpenAI's latest release does though, not what OpenAI may release in a decade or two.

What excites the true believers is the slope, not the intercept.

The phrase "true believers" jumps out to me here. It sure makes AI (well, ML) sound more like a religion than a field of technological research.

elevatedastalt2• 2 years ago

The hype follows what OpenAI's latest release does though

Yes, because what OpenAI releases today helps us improve the prediction of what it may release in a decade or so.

signal_space• 2 years ago

Cult of the exponential, considers sigmoids heresy.

bugbuddy2• 2 years ago

Your take reminds me how self driving car boosters have been saying for the last 20 years. I know Waymo is out there driving itself IF you don’t count the operators with remote controls connected over 5G. We could achieve AGI today if you don’t count the Indian worker sitting remotely typing a response to your chat messages.

Davidzheng10• 2 years ago

lol the cognitive dissonance of knowing your own argument is wrong and still not able to admit it

inopinatus• 2 years ago

“All you need is irrational faith and you too can be unable to distinguish between hype and overhype!”

metaphor• 2 years ago

The hype isn't coming from where AI is today, but where it will be in 2030 and 2040.

Scott McNealy circa 2002[1][2] had some relevant food for thought:

> But two years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don't need any transparency. You don't need any footnotes. What were you thinking?
> I was thinking it was at $64, what do I do? I'm here to represent the shareholders. Do I stand up and say, "Sell"? I'd get sued if I said that. Do I stand up and say, "Buy"? Then they say you're [Enron Chairman] Ken Lay. So you just sit there and go, "I'm going to be a bum for the next two years. I'm just going to keep my mouth shut, and I'm not going to predict anything." And that's what I did.

[1] https://archive.is/EZ6vD#selection-2985.79-2985.928

[2] https://archive.is/EZ6vD#selection-3009.1-3009.399

advael• 2 years ago

There has been no convincing argument by anyone that this will change in a way that will drive the value that the grifters in silicon valley are promising. It's tautological to say that people making bets are making expected value estimations about the future, and goldman sachs are doing just that

wkat42423• 2 years ago

The hype isn't coming from where AI is today, but where it will be in 2030 and 2040.

Yeah but the investors they're talking to aren't thinking about 2030-2040. They are thinking about 2025. If they don't get their 2000% profits they are imagining now they will declare it a FLOP!!!! and drop it. Doing harm to the overall development of a technology that does have its merits but is just propped up to a position it's not ready for by a long shot.

With this kind of pressure a slow slope is not enough to keep investors happy.

These guys are all hitting themselves in the head every day that they didn't buy bitcoins when they cost $0.01 and they are constantly telling themselves the next big thing will make them rich beyond their wildest dreams. They are ruining good tech this way. Metaverse was pretty decent too, it was just not for everyone yet (and it won't be for a loooong time), but it does have its niche uses.

freejazz• 2 years ago

No, the hype is coming from where people are saying it will be in 2030 and 2040.

meiraleal4• 2 years ago

- The hype isn't coming from where Bitcoin is today, but where it will be in 2030 and 2040.

I'm among the AI true believers but the change above made me have second thoughts.

smt882• 2 years ago

This is exactly the argument we were all having about crypto a few years ago. "It's early days!" they told us for 10 years.

Now crypto is used primarily for crime and speculation, which is exactly what we'll be using GenAI for in a few years, especially as it poisons its own source of training data.

kaonwarb• 2 years ago

Key difference from my perspective: I never did hear a convincing use case for large-scale use of crypto. It's really easy to make one for AI.

anytime57042• 2 years ago

Crypto (currency) never served a real use case other than pump and dumps or dark web transactions.

GenAI is used by people for all sorts of purposes. Anecdotally, it has largely replaced my own usage of traditional search engines.

This strikes me as a false equivalence the same way comparisons to the dot com bubble do.

nabla9• 2 years ago

But it's only overhyped if AI stays that way.

This is a fallacy that comes from not doing discounting. When you apply discounting with any realistic discount rate, current investments don't pay off if AI becomes something in 2040.

Fro investors eventually is not a good enough. They move money into some other asset and wait until the time comes.

gexla2• 2 years ago

I didn't read the paper. But I opened it up in a tab, typed "unreliable" in the search box, and zero results. I'm wondering what words they actually used. I also didn't find "overhyped? or "expensive." I'm sure those words aren't unreasonable as a take-away from the paper. But they aren't in the paper.

ChildOfChaos• 2 years ago

Exactly. It's amazing how many people seem to be missing this.

I think a big problem is the amount of companies rushing to add AI to it's products when it's not really that good at the moment or not really that useful so there is somewhat of a backlash against it and people hearing the headlines about AI changing the world, seeing that AI has been added to a product they use, testing it and seeing it's useless and then wondering what all the fuss is about.

I stay up to date with AI news, I follow it quite closely and I interact with chatbots somewhat, however I've yet to find it useful in any real use cases for me, since I don't code and the answers it gives for everything else are usually fairly generic nonsense, but it's amazing just that they can do that and the improvement is there. Image generation is pretty crazy too, video is getting there and audio for sure is going to be done, so I wonder what happens to the music industry? Instead of having Spotify you can generate your own music on a whim. As a music lover, that is going to be very odd.

rldjbpin• 2 years ago

this sort of argument was used for web3/crypto, vr, quantum computing, heck even nuclear fusion.

but the first half vs the rest of the list did not receive the same proportional funds, at least from the tech phase from what we can see.

the core difference i can see now is that the sota is captivating the crowd enough, whether from demos alone or from personal tests.

rib3ye• 2 years ago

Actual report https://www.goldmansachs.com/intelligence/pages/gs-research/...

Right in the preamble

..despite these concerns and constraints, we still see room for the AI theme to run, either because AI starts to deliver on its promise, or because bubbles take a long time to burst.

knowaveragejoe4• 2 years ago

Overhyped? Sure. Expensive? Definitely. Unreliable? Sometimes.

So many HNers love to be contrarian about anything resembling a hype train, and feel validated when a report like this comes out. I think the reality is that people moving forward with integrating AI into various aspects of their business and reaping the rewards aren't here making snarky "I told you so" comments, which seems to be every other comment on this and the other threads about the same article.

monero-xmr• 2 years ago

HN is overwhelmingly pro-AI and on the LLM hype train. Silicon Valley and YC are largely only investing in that sector right now. Pretending there is some huge contrarian group here is absurd

jncfhnb2• 2 years ago

Sometimes unreliable is a very funny qualifier. If something were consistently unreliable then unreliable wouldn’t be the right term.

sojournerc2• 2 years ago

But, I've yet to see the "rewards". I see tech companies laying off staff with the expectation of AI taking up the slack while every piece of software I use gets shitier. Show me the bottom line improvement, or better tools, better art, better music... It just doesn't live up to the hype.

Davidzheng10• 2 years ago

It's not overhyped. It's correctly hyped because it's hard to estimate the upper bounds of the value AI can bring.

EternalFury2• 2 years ago

It’s healthy for GS to express a contrarian opinion.

If GPT 5 doesn’t meet high expectations, another winter could soon arrive.

duskwuff• 2 years ago

If the success of a single company -- indeed, a single product -- is really that pivotal, the industry is already on the brink of collapse.

bigfishrunning• 2 years ago

Another winter is inevitable, but how soon will it come?

Davidzheng10• 2 years ago

It's not inevitable

GaggiX6• 2 years ago

A winter where AI will continue to be used for semantic search, moderation, translation, captioning, TTS, STT, context-aware grammar checker, LLM, audio/image classifier.

An AI winter where AI will be used everywhere.

threetonesun• 2 years ago

It's a difference between big, interesting, investment worthy AI that stands alone and small, uninteresting, practical business features that happen to use AI. The real bellwether for me will be whether or not Apple, after releasing it's AI features, ever talks about them as a main point in a WWDC again, or if it just gets pushed into "here's something new photos can do (with AI)" like it has for the last x many years.

EternalFury2• 2 years ago

People always conclude I hate AI. But it’s only a matter of ROI. The amount of capital investment must be matched with increased sales or reduced expenses. If reduced expenses come via job elimination, it doesn’t last long in a consumer society. Increased sales through new product categories are an option, but costs will need to come down and reliability will need to increase. Hence the current hopes.

crispyambulance• 2 years ago

Goldman Sachs is overhyped, overpaid, and unreliable.

DarkNova6• 2 years ago

Those are not mutually exclusive.

frithsun• 2 years ago

AI is enabling a new generation of exploits and hacks that will force tech to get a lot simpler, more human readable, and more privacy oriented.

Everything is going to need to be refactored for a world where bad actors have truly unlimited time and attention to invest in identifying privacy and security vulnerabilities.

meiraleal4• 2 years ago

That would be a great change.

phendrenad2• 2 years ago

They're early to this opinion, people will start to realize this en masse soon.

Digital coding assistants are here to stay, but not at the $10/month price point. Maybe $10/year.

meiraleal4• 2 years ago

What's current AI platforms are missing is a friendly way to use their API individually. It should be easier for me to use my own ChatGPT or Claude account on another app/website. They could get a much bigger revenue with that too. But none of them are really willing to share the pie.

shepherdjerred• 2 years ago

I would easily pay $100/mo for copilot at its current level of function

wkat42423• 2 years ago

Wow.

I did not imagine I would ever agree with Goldman Sachs on anything in my life.

Now, I do think it has its uses, but it's once again way overhyped like all the hypes that came before it. As always there is a certain use to it but it's way overblown.

hypeatei2• 2 years ago

And we're adding browser APIs for it! What could go wrong?

meiraleal4• 2 years ago

Are we?

robotnikman• 2 years ago

I think it's great in specific use cases, like the meeting discussion overview in teams. The problems come when you think you can build one AI that can do anything and everything, or tackle problems with a wide scope, or start using the AI as an infallible source of information. It seems like a lot of people were expecting the latter to be true.

HenryBemis• 2 years ago

Wait until the moment that they can monetize it/save a bunch of money. Then see them dropping 5000-10000 employees globally because 'shareholders are pressing us to...'

Some banks that develop their own applications will start using it heavily when they will realize that their in-house trading platform can execute orders 0.0001 seconds faster (or something insanely small).

I strongly believe that the only thing that will hold AI/LLMs back is regulation, and nothing else.

kibwen2• 2 years ago

like the meeting discussion overview in teams

Amusingly, Microsoft had an autosummarize feature in Word as far back as, like, 1997. The fact that this appears to be the rare feature that actually got removed from Word could be an indication that this use case might not be as compelling to users as one might think.

brookst3• 2 years ago

It’s overhyped like the internet was in 1995.

ls6122• 2 years ago

Exactly. I’ve thought since ChatGPT first took the world by storm that the directional promises of AI were completely correct but the hardware isn’t at all there yet. The dot com bubble crashed yet the Internet is more important than ever today.

kibwen2• 2 years ago

It's overhyped like the time everyone told us cryptocurrencies in 2015 were like the internet in 1995.

Jensson11• 2 years ago

Internet in 1995 had already solved all the problems required to revolutionize the world with cheap fiber optics fiber being laid everywhere, the world just had to catch up to it.

The same isn't true for generative AI today, in order for it to revolutionize the world similarly to how the internet did it still need some more unknown pieces, which you are expecting to happen but it might not. The internet however was already completely solved when it was hyped, very different.

mandmandam• 2 years ago

Here's the thing though: You don't agree. Not really.

Because Goldman Sachs have been using AI for well over a decade. They're saying one (popular right now) thing, and very much doing another (quietly).

Their employees are capitalizing on this latest AI boom [1] to make their efficiency go way up, radically changing their processes... And a lot of people who were slow to grasp what AI can do for their workflow are being made redundant [2].

I can only imagine what those people laid off are thinking of this statement.

1 - https://www.wsj.com/articles/goldman-sachs-deploys-its-first...

2 - https://duckduckgo.com/?q=goldman+sachs+layoffs

OutOfHere2• 2 years ago

It's 100% stock market manipulation; nothing more and nothing less.

senectus1• 2 years ago

I like to think that its nice to see that Goldman Sachs agree with me for a change.

I came to this conclusion a while ago :-P

anal_reactor2• 2 years ago

I strongly believe that AI is the next big thing, but there's no point in discussing things, because there's no empirical evidence either way. There was no evidence that internet would take off, and there was no evidence that crypto wouldn't.

MrVandemar2• 2 years ago

But unlike “AI”, unlike “Crypto”, the internet wasn't initially hyped through the roof, and people had no expectations of it, and it came from academia/military, and not “OMG! I'm an buzzword spouting entrepreneur and I need me some investment dollars so I can grow and cash out and retire.”

jojola• 2 years ago

Really hard to disagree with Goldman Sachs on that one. There's no reason to believe in all this hype unless you are one of the many that are surfing, and making money, with it. Besides all those chatbots there is not a lot of AI products that are really useful to the everyday user.

honeybadger1• 2 years ago

HNers are wrong about this just like they're wrong about Tesla, and the proof is outside on the road.

OldSchool• 2 years ago

I would have thought GS would be wise enough to not bully AI now in its early days just in case it ends up taking over the world.

bastien2• 2 years ago

Just remember: the only reason they threw a trillion dollars at genAI is because they thought they could lay off their entire creative staff

ChrisArchitect• 2 years ago

[dupe]

More discussion:

https://news.ycombinator.com/item?id=40837081

https://news.ycombinator.com/item?id=40856329

gexla2• 2 years ago

I'm not going to read the whole paper, but I didn't find anything in the paper which used the words "overhyped" "wildly expensive," or "unreliable."

Unreliable for what? There's so many different ways which people use these services. The way I use them, it's not unreliable. Because I don't use these services in a way which would be unreliable.

Instead, it seems the broader conversation that the huge investment in AI might not pay off right away is very plausible. I pay $20 per month for one of these services. And that $20 service is maybe the most expensive to implement of anything I have paid $20 monthly by a long shot.

And this is important for the audience of Goldman Sachs. Maybe it's not so important for the typical reader of Hacker News. Who reads Goldman Sachs papers?

OutOfHere2• 2 years ago

Why do people not understand that such news come out of the woodwork when they have a big short position in the stock market.

tim3333• 2 years ago

It doesn't sound like they are short saying bubbles may go on for a considerable time etc. Goldman etc make most of their money from fees from clients, not from punting the market.

tim3333• 2 years ago

Quibbling a bit:

questions whether generative AI will ever become the transformative technology that Silicon Valley and large portions of the stock market are currently betting on...

Who really cares if the AI is generative or not? AI is pretty much bound to be a transformative technology.

higher productivity (which necessarily means automation, layoffs, lower labor costs...

Nah. It can also mean more stuff produced. And probably will.

That said current asset prices may well be a bit inflated. And some startup could come up with a better algo for self improving AGI rendering the other companies not worth much. Bit like how Google came along and rendered the other search companies not worth much.

djaouen• 2 years ago

Say what you will about GS, they are correct here.

AbstractH243• 2 years ago

It’s useful for turning unstructured data into structured data. And other similar repetitive tasks.

Not chatting with and asking to write something open ended that even you don’t know how to do.

amai• 2 years ago

Goldman Sachs itself is overhyped, unreliable and expensive.

dang• 2 years ago

Maybe so, but please don't post unsubstantive comments to Hacker News.

Goldman Sachs: AI Is overhyped, expensive, and unreliable

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