Hello and welcome to Eye on AI. In this edition…the U.S. Census Bureau finds AI adoption declining…Anthropic reaches a landmark copyright settlement, but the judge isn’t happy…OpenAI is burning piles of cash, building its own chips, producing a Hollywood movie, and scrambling to save its corporate restructuring plans…OpenAI researchers find ways to tame hallucinations…and why teachers are failing the AI test.
Concerns that we are in an AI bubble—at least as far as the valuations of AI companies, especially public companies, is concerned—are now at a fever pitch. Exactly what might cause the bubble to pop is unclear. But one of the things that could cause it to deflate—perhaps explosively—would be some clear evidence that big corporations, which hyperscalers such as Microsoft, Google, and AWS, are counting on to spend huge sums to deploy AI at scale, are pulling back on AI investment.
So far, we’ve not yet seen that evidence in the hyperscalers’ financials, or in their forward guidance. But there are certainly mounting data points that have investors worried. That’s why that MIT survey that found that 95% of AI pilot projects fail to deliver a return on investment got so much attention. (Even though, as I have written here, the markets chose to focus only on the somewhat misleading headline and not look too carefully at what the research actually said. Then again, as I’ve argued, the market’s inclination to view news negatively that it might have shrugged off or even interpreted positively just a few months back is perhaps one of the surest signs that we may be close to the bubble popping.)
This week brought another worrying data point that probably deserves more attention. The U.S. Census Bureau conducts a biweekly survey of 1.2 million businesses. One of the questions it asks is whether, in the last two weeks, the company has used AI, machine learning, natural language processing, virtual agents, or voice recognition to produce goods or services. Since November 2023—which is as far back as the current data set seems to go—the number of firms answering “yes” has been trending steadily upwards, especially if you look at the six-week rolling average, which smooths out some spikes. But for the first time, in the past two months, the six-week rolling average for larger companies (those with more than 250 employees) has shown a very distinct dip, dropping from a high of 13.5% to more like 12%. A similar dip is evident for smaller companies too. Only microbusinesses, with fewer than four employees, continue to show a steady upward adoption trend.
