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The ongoing artificial intelligence race between the United States and China is no longer just about the uncanny evolution of Will Smith eating spaghetti, as designed by ChatGPT and its legions of competitors over the years.
It has global implications. First, there's the balance of power, technological and economic, between the world's two largest economies. Then there's the risk of models going rogue and creating an existential threat to humanity, as industry leaders have acknowledged in recent weeks. Combined with the supersonic pace of the technology's development, that creates daunting choices for financial advisors and their clients.
"China is a huge understated problem," Heritage Financial president Paul Schatz said. "If the US is the Wild West, which it is, I can't even articulate what China is going to do by allowing their AI to go rogue," he added. "This probably leads to one of the grand market blowups by 2030."
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Like Warren G and Nate Dogg said: Regulate
The newest warnings about the threats posed by singularity, or the runaway advancement of AI that learns to self-improve beyond human comprehension, have prompted leaders in the market — OpenAI's Sam Altman, Anthropic's Dario Amodei and X's Elon Musk — to call for swift regulation. While there is bipartisan support for rules to keep AI from advancing too quickly, Congress as a whole appears unprepared to act, which is a problem, Schatz said. "The risks are everywhere, which is why the rewards are potentially so incredible and can lead to huge boom-and-bust cycles."
Presently, the US market has an advantage over China's, with domestic AI models scoring better, said Jake Miller, co-founder and chief solutions officer at Opto Investments. "Every frontier model since 2023 has been American, and Chinese models trail by roughly seven months on average," Miller said. "Seven months is a large gap in a field moving this fast, and it has not closed."
But a challenge in the US is the resistance to data center construction, which he said is a real political issue but not much of a substantive one. In part, that's because estimates of data centers' water and energy consumption may be exaggerated, he said:
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