Mediaboss Marketing

By Therese Poletti

It was called an "iPhone moment" for artificial intelligence, likened to the development of the World Wide Web for the internet, dubbed a Cambrian explosion, equated to the invention of the lightbulb or the printing press.

Whatever the superlatives, there is no doubt that the debut one year ago of a very fast and fluid chatbot called ChatGPT, even with its inaccuracies, has become the most important moment for Silicon Valley since the the debut of Apple Inc.'s (AAPL) iPhone in 2007 - or even the dot-com boom years earlier.

"It might be the most important human invention ever," said Jerry Kaplan, an entrepreneur, author, AI expert and Stanford University adjunct lecturer, at a discussion sponsored by Reinvent Futures this summer. "We have created a tool that can use tools. That is a very fundamental difference, and we have crossed that boundary."

ChatGPT, using a technology called generative AI, and its latest iterations and copycats have upended the hierarchies of nearly every technology sector, including semiconductors, consumer, hardware, software and the cloud, while prompting companies in farther-out sectors, like dining and energy, to tout their AI efforts as well. It also has had a huge effect on Wall Street and the stocks of companies deemed to be winners and losers in AI.

Also read: What is ChatGPT? Well you can ask it yourself.

The technology has also rekindled the startup community, especially in San Francisco, with new ideas and funding, bucking an overall downturn in venture-capital financing, and bringing hopes for future IPOs.

ChatGPT wasn't the first chatbot to go viral. Just six years ago, some of you might remember Microsoft Corp.'s (MSFT) ill-fated Tay, a chatbot that was launched on Twitter and then pulled by the software giant 16 hours later, after it began spewing offensive tweets as responses, as it learned by offensive comments made to it in tweets.

Last year's release of ChatGPT-3, though, revolutionized the AI field by making it accessible to many to use for mundane, or even creative, writing tasks. Ethan Mollick, an associate professor at the Wharton School, wrote in the Harvard Business Review a year ago that ChatGPT was a tipping point for AI, because it crossed a threshold where "it is generally useful for a wide range of tasks, from creating software to generating business ideas to writing a wedding toast."

The business world jumped on its potential and has not looked back since. Companies are experimenting and using AI to eliminate jobs and become more efficient. Morgan Stanley said last month that it believes 44% of the labor force will be affected over the next few years, with an economic impact of $2.1 trillion, eventually soaring to $4.1 trillion.

"Every industry, not just IT, every industry is talking about it or talking about how to integrate into their business," said Haibing Lu, a professor and department chair of information systems and analytics at the Leavey School of Business at Santa Clara University. "AI is on the radar of every business. I even talked to people in the winery biz. They are very traditional...but even those small business think about how AI will impact their business. Everyone realizes the impact of AI."

Companies began looking at bringing AI into their systems, leading to a massive IT investment in both their onsite data centers and in cloud computing systems, in a rush to add the massive computing power needed to run AI. Earlier this year, IDC predicted that spending by companies on AI-centric systems would reach $153 billion this year, with banking and retail leading the way, a jump of almost 27% from 2022. Companies in the thick of it, like chip makers Nvidia Corp. (NVDA), Broadcom Inc. (AVGO) and software giant Microsoft, which invested in OpenAI in 2019, have seen their stocks soar 229%, 70% and 60%, respectively, this year.

Nvidia is the true standout, providing graphics processors designed to run large language models and training applications for AI-focused data centers that its chief executive, Jensen Huang, calls "AI factories." It has seen its revenue double, and then triple in the past two quarters compared with a year ago, as it is swamped with demand for its chips and software.

"Companies are now creating the 'chief AI officer,'" said David Borish, an AI strategist. "I get pinged about that all the time." The role of a chief AI strategist or an AI officer is a new role, he said.

But the rush to embrace the vast improvements in a technology that has been over 50 years in development is fueling fears about how powerful AI is becoming, with debates raging about the march toward so-called artificial general intelligence, the point at which a machine becomes as smart as humans, and the needs for guardrails on its development.

That debate may also have been the crux for Silicon Valley's version of a soap opera at OpenAI, when this month's sudden firing of Chief Executive Sam Altman by the board - and his quick return - captured the attention of techies and civilians alike. Altman was even hired by Microsoft CEO Satya Nadella, only to negotiate a return to OpenAI days later, after nearly all the company's 800 employees threatened to quit and go to Microsoft.

The company also added Bret Taylor, the former co-CEO of Salesforce Inc. (CRM) and Larry Summers, the former Treasury secretary, to its small board of directors, joining Quora CEO Adam D'Angelo. Two other directors stepped down in the brouhaha before Thanksgiving.

A few days after Altman's return, Reuters reported what could have been the reason for his initial ouster. Some staff researchers reportedly wrote to the board, warning of a project called Q* (Q-Star), saying that it was a breakthrough toward artificial general intelligence but that it could also threaten humanity. Reuters reported that the board was concerned about commercializing AI's advances before understanding the consequences.

This has lead to more hand-wringing about whether the machines will eventually take over. But some savvy technologists believe it is time to calm down. Kaplan pointed out over the summer that artificial general intelligence, also called AGI, has a lunatic fringe all riled up and scared.

"They are not coming for us, because there is no 'they,'" he said, adding that he had a perfect answer to that problem: "Let's not do that."

"I think what it is, is the craftsman was bewitched by his craft," said Paul Saffo, a Silicon Valley forecaster and a consulting professor at the School of Engineering at Stanford University. Saffo said that over the long history of AI, researchers have long over-promised and under-delivered. "It is the opposite of biotech. Biotech mumbles and understate their innovations and it turns out to be a big deal. But AI in particular has a long history of wildly overstating what they are doing."

So far, though, the capabilities of generative AI have captured the world. And it's too late to put the genie back in the bottle.

-Therese Poletti

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

12-02-23 1001ET

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