Experience Stern | Faculty & Research

Over the past year and a half, artificial intelligence has gone from imaginative speculation to market reality, fueling both greed and fear. As a few companies, such as Nvidia and Microsoft (with its $10 billion investment in OpenAI), gained hundreds of billions of dollars in market capitalization, Hollywood writers and actors went on strike, demanding new rules for AI-generated material.

I am both a believer and a skeptic of revolutionary changes in markets, having seen major disruptions play out both in my personal life and in my investment portfolio. After personal computers in the 1980s came the dot-com boom and the internet revolution in the 1990s, followed by smartphones in the 2000s, which facilitated the explosion of social media in the 2010s. The defining feature of these developments was not just that they affected broad swaths of business – sometimes positively, sometimes adversely. It was that they fundamentally changed how we live, work, and interact.

AI holds the potential to drive similarly sweeping changes. My wife, who teaches fifth grade, is already grappling with students using OpenAI’s ChatGPT to complete their homework assignments, and companies are scrambling to integrate AI into their operations. For investors, however, the task is to separate hype from reality. We can start by revisiting the big technological and market developments of the last four decades.

Read the full Project Syndicate article. 
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Aswath Damodaran holds the Kerschner Family Chair in Finance Education and is Professor of Finance at New York University Stern School of Business.