Artificial intelligence has been ruling the news lately, and Nvidia's (NVDA) surging valuation is only adding to that conversation.
Though AI has been around for a while, it became much more visible in November when OpenAI launched ChatGPT, a large language model (LLM) generative AI chatbot that people can use to write essays, fiction and code, among other things.
And though the model seems powerful, some investors (and experts) think it is a bit overhyped.
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"Today's things that they're calling AI -- particularly the generative AIs like ChatGPT -- are literally just BS generators," Roger McNamee, co-founder of the venture capitalist firm Elevation Partners, told CNBC. "They have no verified content in them and the results are incredibly unreliable. The notion that we're going to apply this to things like search, it's just going to result in one bad outcome after another."
Saying that every LLM model costs roughly half a billion dollars worth of Nvidia chips to make, McNamee criticized OpenAI's business model (or lack, thereof).
"The guys at OpenAI are trying to create the illusion that what they're doing is inevitable," he said. "And yet there is no obvious business model, there's no way to monetize this other than surveillance capitalism, and we know from social media how much harm that causes."
For McNamee, it comes down to the harsh realities of a high-interest-rate market against the idealistic dreams of AI makers.
"What you're looking at here is a battle between the OpenAI guys trying to create this sense of inevitability, and the reality of the marketplace saying 'wait a minute, guys. Interest rates are now 5%," McNamee said. "Half a billion dollars in parts just to do each training set that you do, plus the labor, plus, if you do this properly, whatever the costs are of curating the data, that's too high."
