US Federal Reserve Chair Jerome Powell said on Wednesday that artificial intelligence is unlike the dotcom bubble of the 1990s, as companies leading the AI race are contributing to economic activity.
"This is different in the sense that these companies, the companies that are so highly valued, actually have earnings and stuff like that," Mr Powell told reporters after the US central bank lowered interest rates by 25 basis points.
He said the dotcom-era firms that went bust were more "ideas rather than companies", while today's AI companies have business models and profits. He also said that investment in AI equipment and infrastructure is a source of growth in economic activity.
Mr Powell did not mention any company by name.
One analysis from JPMorgan released last month showed AI-related capital expenditures contributed to 1.1 per cent of economic growth in the first half this year, passing consumer spending as the driver of expansion. Hyperscalers are also projected to allocate $342 billion to capital expenditures this year, the report said.
Earlier on Wednesday, chip maker Nvidia became the first company in the world to reach a market value of $5 trillion on lofty AI hopes.
Meanwhile, Qualcomm joined the AI data centre race this week when it announced the AI200 and AI250 chips, while also unveiling Saudi tech startup Humain as its first major buyer.
Microsoft topped $4 trillion in market value after it reached a deal with OpenAI on Tuesday that would allow the ChatGPT maker to restructure as a public benefit corporation, or PBC.
Microsoft will hold a stake of $135 billion – or 27 per cent – in the OpenAI Group PBC that would be controlled by the OpenAI Foundation. Microsoft has invested more than $13 billion in OpenAI.
Anthropic, which is a private company, announced a cloud deal with Google last week worth tens of billions of dollars.
Mr Powell said the Fed is also closely monitoring how AI could affect the jobs market.
Amazon recently announced that it is laying off 14,000 workers after cuts among other Big Tech companies. Microsoft has made more than 15,000 cuts this year, while Meta and Google have also made layoffs.
"You see a significant number of companies either announcing that they are not going to be doing much hiring or actually doing layoffs, and much of the time they're talking about AI and what it can do," he said.
"So we're watching that very carefully."
Fifa Club World Cup quarter-final
Esperance de Tunis 0
Al Ain 3 (Ahmed 02’, El Shahat 17’, Al Ahbabi 60’)
Martin Sabbagh profile
Job: CEO JCDecaux Middle East
In the role: Since January 2015
Lives: In the UAE
Background: M&A, investment banking
Studied: Corporate finance
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
INDIA SQUAD
Virat Kohli (capt), Rohit Sharma, Shikhar Dhawan, KL Rahul, Vijay Shankar, MS Dhoni (wk), Kedar Jadhav, Dinesh Karthik, Yuzvendra Chahal, Kuldeep Yadav, Bhuvneshwar Kumar, Jasprit Bumrah, Hardik Pandya, Ravindra Jadeja, Mohammed Shami
Multitasking pays off for money goals
Tackling money goals one at a time cost financial literacy expert Barbara O'Neill at least $1 million.
That's how much Ms O'Neill, a distinguished professor at Rutgers University in the US, figures she lost by starting saving for retirement only after she had created an emergency fund, bought a car with cash and purchased a home.
"I tell students that eventually, 30 years later, I hit the million-dollar mark, but I could've had $2 million," Ms O'Neill says.
Too often, financial experts say, people want to attack their money goals one at a time: "As soon as I pay off my credit card debt, then I'll start saving for a home," or, "As soon as I pay off my student loan debt, then I'll start saving for retirement"."
People do not realise how costly the words "as soon as" can be. Paying off debt is a worthy goal, but it should not come at the expense of other goals, particularly saving for retirement. The sooner money is contributed, the longer it can benefit from compounded returns. Compounded returns are when your investment gains earn their own gains, which can dramatically increase your balances over time.
"By putting off saving for the future, you are really inhibiting yourself from benefiting from that wonderful magic," says Kimberly Zimmerman Rand , an accredited financial counsellor and principal at Dragonfly Financial Solutions in Boston. "If you can start saving today ... you are going to have a lot more five years from now than if you decide to pay off debt for three years and start saving in year four."
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
No Shame
Lily Allen
(Parlophone)
Mohammed bin Zayed Majlis
Despacito's dominance in numbers
Released: 2017
Peak chart position: No.1 in more than 47 countries, including the United States, the United Kingdom, Australia and Lebanon
Views: 5.3 billion on YouTube
Sales: With 10 million downloads in the US, Despacito became the first Latin single to receive Diamond sales certification
Streams: 1.3 billion combined audio and video by the end of 2017, making it the biggest digital hit of the year.
Awards: 17, including Record of the Year at last year’s prestigious Latin Grammy Awards, as well as five Billboard Music Awards
Zayed Sustainability Prize
What is a robo-adviser?
Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.
These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.
Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.
Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.
