The Coming AI Crash: Faking Intelligence Versus Real Thinking
The Coming AI Crash: Faking Intelligence Versus Real Thinking Yesterday's mini-crash of AI stocks is not surprising. AI related stocks have been priced to perfection reflecting the view that AI is a revolution on par with the industrial revolution or the transition from horse to combustion engine for transportation. But the crash is just the first symptom of a greater problem, namely that the technology does not live up to the hype. The large language models are impenetrable black boxes due to their nature; they are nonlinear statistical models with huge number of parameters. It is the huge number of parameters that make them power hungry beasts of requiring GPUs to estimate them. For details on the crash itself, read https://thetechcapital.com/tech-stocks-tumble-as-deepseek-triggers-1-trillion-market-crash/. The term 'training an AI model' means exactly the same thing as estimation of a large nonlinear statistical model like the one below. I am a time series statistica...