The hype of artificial intelligence is running up against pricey realities, at least for now. MacBooks and Xboxes are getting more expensive due to “AI inflation.” Central bankers are warning the AI boom could soon trigger a financial crash. Ford, meanwhile, has hired hundreds of engineers to do the work that artificial intelligence software could not. It has opened debate as to whether the benefits of AI are worth the costs.
The mass buildout of data centers has created the “global shortage of memory and storage chips” behind the new device price hikes, said CBS News. MacBook Pros are going from $1,699 to $1,999, while the entry-level Xbox is rising to $499 from $399. The demand from tech giants such as Alphabet, Amazon, Meta and Oracle leaves fewer chips for “regular consumer devices,” Wedbush Securities’ Dan Ives said to the outlet. “That just further drives up prices.”
That inflation is typical of any “technological revolution,” Jennifer Schonberger said at Yahoo Finance. Big investment in new tech puts “pressures on resources with a lot of demand chasing a limited supply.” For now, AI inflation is “screwing with the rest of the economy,” said John Herrman at New York magazine. Once-accessible goods “seem to be slipping out of reach” of ordinary Americans, which “could meaningfully contribute to an already apocalyptic” national mood.
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But the data center surge could come to a sudden, thudding halt if those big companies do not soon see a return on their investment. The Bank for International Settlements (BIS) on Sunday warned that an end to the data center “spending spree” could “rattle financial markets and damage the global economy,” said the Financial Times. There are “instructive parallels” in the dotcom boom of the 1990s and the buildout of British railways in the 19th century, the BIS said in its annual economic report. “These episodes ended with an eventual reversal in investment, inducing economy-wide recessions.”
The payoffs are fuzzy. Ford has hired 350 “veteran engineers” to “reprogram the artificial intelligence tools that weren’t getting the job done,” said Bloomberg. AI is a “fantastic tool,” Ford executive Charles Poon said to reporters last week, per the outlet. But it is “only as good as the information you use to train it.” Ford’s dramatic shift to AI was a “grave mistake” that affected the company’s quality control, said Danni Santana at Moneywise. That happens “when you overcommit to the technology without properly training it.” The company will still use AI, but its experience demonstrates that the technology cannot “completely replace humans in the workforce” for now.
What next?
Businesses that enthusiastically embraced artificial intelligence are now trying to find a balance. Many firms urged their employees to “integrate AI tools into their work” only to see their “AI spending bills double or triple,” said The Wall Street Journal. Executives at enterprises like Uber, Meta and Microsoft are now looking to “steer workers toward cheaper, homegrown tools” and help those employees “hone their skills.”
