Is the AI Boom Fading Just Six Months In?

Is AI's Momentum Fading Just Six Months After Its Surge?

The recent World Artificial Intelligence Conference showcased over 30 cutting-edge AI models from leading companies such as SenseTime, Baidu, iFlytek, Huawei Cloud, Alibaba Cloud, and JD Cloud. These innovations highlight a thriving environment in AI, particularly following the launch of ChatGPT, which sparked rapid advancements in general AI capabilities. Tech giants worldwide, including Alibaba and Baidu, have launched their own versions of AI models, while notable figures like Wang Huiwen, Wang Xiaochuan, and Zhang Yiming have re-emerged in the industry, likening the situation to a modern "battle of the gods" in AI.

However, as with any trend, fluctuations are inevitable. Signs of diminishing momentum in AI are becoming evident merely six months after its peak. Some skeptics suggest that "no one will be using it in five years," reminiscent of the internet bubble's cooling phase two decades ago.

When ChatGPT debuted, it quickly became a sensation in the tech industry, capturing millions of users globally. This surge in excitement fueled interest in AI startups, prompting significant investments. Wang Huiwen launched "Lightyear" with a hefty investment, aiming to establish a Chinese equivalent of OpenAI. Meanwhile, ByteDance’s Zhang Yiming delved into academic research, and investor Shen Nanpeng engaged with AI entrepreneurs, ultimately driving numerous AI-related stocks to all-time highs.

Yet, this initial enthusiasm appears to be waning. ChatGPT's web traffic growth has plateaued after an extraordinary start, dropping from a 130% month-on-month increase in January to near stagnation in subsequent months. Additionally, user engagement is declining, with average session lengths decreasing from over 8 minutes to around 7.5 minutes, signaling possible growth challenges.

This trend extends beyond ChatGPT, impacting the wider AI landscape. Platforms like Discord and various Baidu AI products have exhibited steady or declining traffic. Furthermore, the investment frenzy surrounding AI seems to be subsiding, evidenced by recent declines in AI-related stocks in both China and the U.S. Chinese AI shares fell by 4.7% within a week, with many experiencing drops over 10%. In the United States, major chip manufacturers like Intel and AMD have faced similar downward trends.

The decline in AI stock excitement has also coincided with significant sell-offs by major investors. Kunlun Wanwei, previously a standout in the AI sector, saw its stock stagnate as a significant shareholder planned to liquidate substantial holdings. Additionally, prominent firms like NVIDIA have experienced notable stock reductions from their management teams.

A noticeable gap also exists between early-stage markets in China and Silicon Valley. Data indicates that from December to early May, the U.S. AI sector recorded over 520 seed and angel funding rounds, whereas China reported only about 30, amounting to less than 10 billion yuan. Though Lightyear is regarded as a frontrunner in China's AI space, concerns about its future arose when founder Wang Huiwen stepped down due to health issues.

In conclusion, while the initial buzz around AI remains strong, current trends suggest a need for introspection and potential recalibration within the industry.