Speaking on a panel at an AI event in Singapore on Monday, Broadcom Inc. Chief Executive Officer Hock Tan said the AI boom has attracted investors whose strategies resemble those of gamblers.
The head of Broadcom, an American chipmaker, also questioned whether businesses were wasting money on AI initiatives and the long-term economics of money-losing AI labs.
“A lot of investors have no clue what they are investing in,” They “set very extreme expectations only to find out that it’s almost like they are in a casino.”
“For now it’s still losing money because they’re spending a lot on training,” Tan said. “So frankly, it doesn’t tell anything at this point except that there is a lot of potential revenue growth out of providing frontier generative AI models.”
Tan stated that AI model developers should focus on finding customers who can generate returns from deploying the technology, rather than relying on users who are currently “wasting money” on tokens during their AI experimentation.
Tan said that his company is overcoming wafer and memory shortages, but capital will be the biggest constraint. He added that OpenAI reaching annualized revenue of $50 billion in September points to a viable business model but offers little guarantee of long-term profitability.
“When you are a kid you go to a video arcade, you play. Your parents give you $10 of tokens, you finish it in 10 minutes and you haven’t learned anything,” he said. “That’s what happening in enterprises today.”
Tan’s comments come as International Monetary Fund Managing Director Kristalina Georgieva warned on Monday that artificial intelligence was hitting the global labor market like a “slow-moving tsunami,” with young graduates first in line to be knocked down.
Intel Corp. CEO Lip-Bu Tan, who joined the panel discussion with his Broadcom counterpart, said the rapid AI buildout will keep hardware in short supply for the next two to three years. He added that the memory chip segment could be among the first to lose some steam.
By CEO NA Editorial Staff
