The Stock Market's Paradoxical Doomsday: Artificial Intelligence Is Running Out of Gas yet Bound to Replace Software

Group 1 - Concerns about AI stocks have emerged as investors question the high valuations and the potential returns from significant capital expenditures planned by major tech companies [1][6] - Recent sell-offs in software stocks are attributed to fears that AI could disrupt software-as-a-service (SaaS) products and business models, leading to a paradox where AI is perceived as both struggling and a threat to existing software [2][9] - The heavy investment in AI-related capital expenditures by large tech firms raises doubts about the sustainability of returns, especially given the resource demands of AI, such as power and water for data centers [6][7] Group 2 - A report from the Lawrence Berkeley National Laboratory predicts that by 2028, over half of the power used by data centers will be for AI, potentially consuming electricity equivalent to 22% of all U.S. households [7] - McKinsey estimates that $6.7 trillion will be needed for data center spending by 2030 to meet the growing demand for computing power [7] - Criticism of OpenAI's latest models has led to skepticism about whether the substantial investments in AI will result in significantly improved models, contributing to the recent market sell-off [8][10] Group 3 - The introduction of new AI tools, such as Anthropic's Claude Cowork, has intensified fears that AI could render many existing software models obsolete [9] - Bank of America's Vivek Arya suggests that while AI models offer unprecedented intelligence, the process of harnessing and productizing this intelligence will take several years, indicating a disconnect between current investment expectations and future outcomes [10]