[The Editors' Verdict] Sorting Out Winners and Losers in AI... Are Companies Prepared?

At the end of last year, I attended a year-end gathering at the invitation of a private economic research institute that publishes annual outlook books on the Korean economy. Amid the exchange of well-wishes, an economist sitting at the same table suddenly raised a topic, asking, "What do you think about the artificial intelligence (AI) bubble?" He, who serves as an economic advisor to the President, added, "I am concerned that the AI bubble might burst in the new year."

He explained that the reason for mentioning the AI bubble was that, despite massive investments by companies, profitability has shown little improvement. He questioned whether this situation, akin to pouring water into a bottomless pot, could really be sustained. The chairman of a domestic securities firm's board, also present at the table, agreed, saying, "This is an issue that cannot be ignored, considering the impact it could have on the capital market." Another economist linked the topic to his research group's interests, saying, "We are contemplating how to combine AI and finance, but the bubble issue could become a variable."

The AI bubble theory is not a new topic. It inevitably surfaces whenever the performance of related companies is announced. The most representative company is OpenAI. Despite triggering a global AI revolution three years ago and generating tremendous revenue, OpenAI still has not turned a profit. According to U.S. IT publication The Information and others, OpenAI's estimated revenue last year is expected to reach $13 billion. However, with enormous funds being spent on model training, there are no signs of improvement in its loss structure. There are frequent predictions that OpenAI's cumulative losses will reach $115 billion by 2029, along with recurring rumors of bankruptcy. OpenAI's partner Oracle also fueled the AI bubble debate when its quarterly earnings, announced in early December, fell short of market expectations.

So far, the AI bubble controversy remains a "storm in a teacup." There are no signs of trouble on the investment front yet. OpenAI continues to attract investors from around the world, dismissing bubble concerns. It has secured $40 billion (about 58 trillion won) from Japan's SoftBank, as well as multi-billion dollar investments from Disney. MGX, a UAE-based technology investment firm specializing in AI and semiconductors, has also provided funding to OpenAI. Demand for semiconductors needed to realize AI performance is at an all-time high. Companies such as Nvidia, Samsung Electronics, and SK Hynix are posting remarkable results. Jensen Huang, CEO of Nvidia, even declared 2024 as "the first year of a decade-long AI boom." Furthermore, considering the intense rivalry between the United States and China over AI supremacy, some believe it will not be easy to halt the flow of capital.

However, investment without guaranteed returns cannot continue indefinitely. As tangible products such as Physical AI are set to be launched in earnest, the market expects this year to be the first year to verify the profitability of AI. There is talk that a selection process will begin, focusing on companies with strong financial resources or highly efficient AI models.

This year, the word most frequently mentioned in New Year’s addresses by major domestic business leaders and CEOs was undoubtedly "AI." This reflects expectations for industrial innovation driven by AI. However, what preparations are being made for the silent threats such as the AI bubble? If the AI bubble bursts, not only semiconductors but also infrastructure such as power and data centers will be hit. All of our key industries would be adversely affected. Since the President’s economic advisor has raised the issue, it appears that the government will also pay close attention to this matter this year.