AI may be overhyped, yet bigger than you think

Excitement over the transformative potential of AI remains sky high, as does investment in the technology. Tech giants Amazon, Alphabet, Meta and Microsoft are expected to collectively spend $500 billion over the next three years in a race for dominance. The aggressive spending has been compared to excessive internet investments in the late 1990s amid questions about a possible AI pullback on the horizon.

The excitement and the concerns could both be valid. That’s because we tend to overestimate mega trends in the short term while underestimating them over the longer term. Consider that early estimates for the size of personal computer, mobile phone, internet and cloud computing markets combined fell short by an average of 38%. Could AI market estimates fall even shorter?

“What is remarkable about AI is its broad potential utility,” says Mark Casey, equity portfolio manager at Capital Group. “Because it can take on a multitude of human tasks, I consider the AI market to be unknowably massive.”

Interested in reading more about what the Capital Group has to say? Click here.

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