Emad Mostaque, founder and CEO of Stability AI, speaks during the Bloomberg Technology Summit in San Francisco, California, US, on Thursday, June 22, 2023.
David Paul Morris | Bloomberg | Getty Images
Artificial intelligence will be the biggest bubble of all time, according to the CEO of open-source AI company Stability AI.
Speaking with UBS analysts on a call last week, Stability AI CEO Emad Mostaque said of artificial intelligence: “I think this will be the biggest bubble of all time.” He added that it is still at the very early stages and not ready for mass-scale adoption in industries like banking just yet.
“I call it the ‘dot AI’ bubble, and it hasn’t even started yet,” he said.
Stability AI is the company behind Stable Diffusion, one of the other more popular generative AI tools aside from OpenAI.
Stable Diffusion allows users to generate photo-realistic images by inputting text. It has more than a million users and has raised over $100 million from investors including Coatue and Lightspeed Venture Partners.
Mostaque, its co-founder and CEO, has been accused of making misleading claims about his background, achievements, and partnerships. He disputed the claims one by one in a detailed response on his personal blog.
Generative AI has captivated the imagination of many an academic, boardroom executive, and even school student, for its ability to produce humanlike language and visual content from scratch in response to user prompts by using vast amounts of data.
AI has long been around, with the technology now a common feature of online browsing, social media platforms, and home assistants. Beyond consumer applications, the technology is being used in medicine, transportation, robotics, science, education, finance, defense, and other industries.
However, a more novel form of AI which has come about recently is generative AI, which is used in tools such as the popular AI chatbot ChatGPT, from U.S. tech firm OpenAI, as well as Google Bard and Microsoft Bing Chat, and image generators like Dall-E, Stable Diffusion, and Midjourney.
Mostaque said that the total amount of investment needed in AI was likely to be $1 trillion “because it’s more important than 5G as infrastructure for knowledge,” and suggested banks like UBS would have to adopt the technology as it is a “massive market.”
But, he added, it is at the “early stages” of development right now.
“It’s not quite ready” to be deployed at scale within large industries like financial services, “but we can see the value,” Mostaque said.
Mostaque said that companies that do not use AI appropriately in their businesses will be “punished” by the stock market.
He cited the example of Google, which lost $100 billion in a single day after its Bard AI chatbot gave inaccurate information in a promotional video upon its release. Google is competing aggressively with Microsoft to win in the race to build superior AI tools.
“I think this is real. I think that there aren’t many investable opportunities here, and you’ll see people moving from the best chip manufacturers to companies that are using this to impact their bottom line and their top line appropriately. And you will see the market punishing those that don’t use this,” Mostaque said.
“This will be one of the biggest investment themes over the next few years,” he added.
Google chief executive Sundar Pichai speaks during the tech titan’s annual I/O developers conference on May 14, 2024, in Mountain View, California.
Glenn Chapman | Afp | Getty Images
Google will start using artificial intelligence to determine whether users are age appropriate for its products, the company said Wednesday.
Google announced the new technique for determining users’ ages as part of a blog focused on “New digital protections for kids, teens and parents.” The automation will be used across Google products, including YouTube, a spokesperson confirmed. Google has billions of users across its properties and users designated as under the age of 18 have restrictions to some Google services.
“This year we’ll begin testing a machine learning-based age estimation model in the U.S.,” wrote Jenn Fitzpatrick, SVP of Google’s “Core” Technology team, in the blog post. The Core unit is responsible for building the technical foundation behind the company’s flagship products and for protecting users’ online safety.
“This model helps us estimate whether a user is over or under 18 so that we can apply protections to help provide more age-appropriate experiences,” Fitzpatrick wrote.
The latest AI move also comes as lawmakers pressure online platforms to create more provisions around child safety. The company said it will bring its AI-based age estimations to more countries over time. Meta rolled out similar features that uses AI to determine that someone may be lying about their age in September.
Google, and others within the tech industry, have been ramping their reliance on AI for various tasks and products. Using AI for age-related content represents the latest AI front for Google.
The new initiative by Google’s “Core” team comes despite the company reorganization that unit last year, laying off hundreds of employees and moving some roles to India and Mexico, CNBC reported at the time.
AppLovin shares soared almost 30% in extended trading on Wednesday after the company reported earnings and revenue that sailed past analysts’ estimates and issued better-than-expected guidance.
Here’s how the company performed compared with analysts’ expectations, according to LSEG:
Earnings per share: $1.73 vs. $1.24 expected
Revenue: $1.37 billion vs. $1.26 billion expected
Net income in the quarter more than tripled to $599.2 million, or $1.73 per share, from $172.3 million, or 51 cents per share, a year earlier, the company said in a statement.
Revenue jumped 43% from $953.3 million a year earlier.
AppLovin was the best-performing U.S. tech stock last year, soaring more than 700%, driven by the company’s artificial intelligence-powered advertising system. In 2023, AppLovin released the updated 2.0 version of its ad search engine called AXON, which helps put more targeted ads on the gaming apps the company owns and is also used by studios that license the technology.
Read more CNBC tech news
AppLovin’s business has been split between advertising and apps, which is primarily made up of game studios that the company has acquired over the years. With the historic growth in its advertising unit, the apps business has become much less important, and now the company says it is selling it off.
“Today we’re announcing we’ve signed an exclusive term sheet to sell all of our apps business,” CEO Adam Foroughi said on the earnings call.
Later in the call, the company said it has signed a term sheet for the sale for a “total estimated consideration” of $900 million. That includes $500 million in cash, “with the remainder representing a minority equity stake in the combined private company.”
Advertising revenue climbed 73% in the quarter to almost $1 billion. The ad business was previously categorized as Software Platform. The company said it made the change because advertising accounts for “substantially all of the revenue in this segment.”
AppLovin said it expects first-quarter revenue of between $1.36 billion and 1.39 billion, exceeding the $1.32 billion average analyst estimate, according to LSEG. More than $1 billion of that will come from its advertising segment, as the company said it is “still in the early stages” of bolstering its AI models.
“The roadmap ahead is filled with opportunities for iteration,” the company said in its shareholder letter. “As we execute, we believe we can continue to drive value creation for our shareholders.”
Cisco CEO Chuck Robbins speaking on CNBC’s “Squawk Box” outside the World Economic Forum in Davos, Switzerland, on Jan. 22, 2025.
Gerry Miller | CNBC
Cisco shares climbed about 6% in extended trading on Wednesday after the networking hardware maker reported fiscal second-quarter results and guidance that topped Wall Street’s expectations.
Here’s how the company did against LSEG consensus:
Earnings per share: 94 cents adjusted vs. 91 cents expected
Revenue: $13.99 billion vs. $13.87 billion expected
Revenue increased 9% in the quarter, which ended on Jan. 25, from $12.79 billion a year earlier, according to a statement. The growth follows four quarters of revenue declines. The company said it had orders for artificial intelligence infrastructure that exceeded $350 million in the quarter.
Cisco now sees adjusted earnings of $3.68 to $3.74 for the 2025 fiscal year, with $56 billion to $56.5 billion in revenue. Analysts polled by LSEG had been looking for $3.66 in adjusted earnings per share and $55.99 billion in revenue. In November, the forecast was $3.60 to $3.66 in earnings per share and $55.3 billion to $56.3 billion in revenue.
Net income in the latest period slid almost 8% to $2.43 billion, or 61 cents per share, from $2.63 billion, or 65 cents per share, a year ago.
Revenue from the networking division totaled $6.85 billion, down 3% but more than the $6.67 billion consensus among analysts surveyed by StreetAccount.
The security unit contributed $2.11 billion. That is a 117% increase from a year earlier, thanks to the addition of Splunk. Analysts expected $2.01 billion, according to StreetAccount.
Read more CNBC tech news
Splunk, which Cisco bought in March 2024 for $27 billion, was accretive to adjusted earnings per share sooner than planned, Scott Herren, Cisco’s finance chief, was quoted as saying in the statement. Cisco’s total revenue would have been down 1% year over year if not for Splunk’s contribution, according to the statement.
Many technology companies have been trying to predict the effects from President Donald Trump’s newly established Department of Government Efficiency. But three-quarters of Cisco’s U.S. federal business comes from the Defense Department, while most of the headcount cutting thus far has occurred in other agencies, Cisco CEO Chuck Robbins said on a conference call with analysts.
“Everything seems to be progressing as we expected,” he said.
Customers do not appear to be pulling up orders before tariffs go into effect, Herren said on the conference call.
As of Thursday’s close, Cisco shares were up 5% so far in 2025, while the S&P 500 index had gained about 3%.