SK Group boss fears the AI gold rush may end if businesses can’t make AI pay

There’s an imbalance between AI costs and AI revenues, and that could end the AI boom

AI is expensive, and so far, customers are not seeing major returns on those investments. The AI gold rush could come to an end if businesses fail to make AI pay. Now, Chey Tae-won, the chairman of the SK Group, believes that the booming AI market will slow it today’s costs/profit imbalance is not addressed. However, the SK Group boss has also stated that Nvidia will maintain its lead in the AI chip industry for at least three years.

Today, companies are investing heavily in AI. They are eager to take advantages of AI technology, and generate any associated profits. That said, those investments will dry up if they cannot generate significant revenues with their AI technology. That means that the continued success of AI companies (like Nvidia) depends on third parties and their ability to make AI pay.

While Chey Tae-won appears to believe that the AI market will remain strong for years to come, he noted that companies may eventually weight up the costs and benefits of Nvidia hardware. If profitability isn’t high enough, firms will reconsider using premium AI hardware. In other words, if the AI gold rush ends, Nvidia will be unable to sell their pickaxes (AI accelerators). Below is what Chey Tae-won had to say to the Korea Times.

When there was no more gold, the sellers became unable to sell pickaxes,

Without making money, the AI boom could vanish, just as the gold rush disappeared.

– Chey Tae-won, Group and Korea Chamber of Commerce and Industry (KCCI) Chairman

Will AI become profitable enough to sustain Nvidia?

Nvidia is currently one of the world’s most valuable companies. That may change if demand for the company’s AI products diminish. If AI isn’t profitable enough, demand for AI hardware will decrease. Beyond that, companies will want to invest in cheaper and more power-efficient AI hardware. This creates opportunities for Nvidia’s competitors, and could (eventually) force Nvidia to lower their prices.

AI is here to stay, but today’s “AI gold rush” may eventually die down. If AI proves to be profitable enough for investors, Nvidia can expect continued growth well into the future. If not, we can expect AI demand to diminish.

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