According to the media on Friday, Elliott Management, Wall Street's top hedge fund, told its investors and clients that large technology giants, especially Nvidia, were in a bubble and that the artificial intelligence technology driving their violent increase in stock prices was overhyped.

Elliott's negative views on artificial intelligence are as follows:

Many applications are not ready for prime time. Many so-called use cases for artificial intelligence will never be cost-effective, will never really work, will consume too much energy, or will prove untrustworthy.

So far, artificial intelligence has failed to deliver on its promise of significant productivity gains. There are almost no practical use cases beyond summarizing meeting notes, generating reports, and helping computers code.

Artificial intelligence is actually a software that has so far not delivered the value commensurate with the hype.

In recent months, companies including Microsoft, Meta and Amazon have been spending billions of dollars to build artificial intelligence infrastructure, with much of the funding flowing to Nvidia. Meanwhile, many of Nvidia's largest customers are also developing their own chips. Elliott questions whether large technology companies will continue to purchase Nvidia's GPUs in large amounts.

In the letter, Elliott told its clients that it has essentially avoided bubble stocks such as the FAANGs. Regulatory filings show that as of the end of March, Elliott had only a small position in Nvidia valued at approximately $4.5 million. As for when the market bubble will burst, Elliott said it could happen if Nvidia reports poor performance and breaks the spell.

Although pointing out that large technology stocks are deep in bubble territory, Elliott has also been cautious about shorting high-flying tech stocks, calling it potentially "suicidal".

Elliott declined to comment on the above points. Elliott Management manages assets of about $70 billion, and was founded in 1977 by billionaire Paul Singer. The company posted a profit of about 4.5% in the first half of this year, with only two years of losses since its launch.

Previously, U.S. chip stocks soared as investors were crazy about the potential of generative artificial intelligence, and Nvidia dominated the market for powerful processors needed to build and deploy large-scale artificial intelligence systems. Now, the stock prices of such companies are fading, and the market is concerned about whether large companies will continue to invest heavily in artificial intelligence.

Concerns about the sustainability of investments in artificial intelligence are sweeping Wall Street, and Nvidia's stock has fallen more than 20% since reaching its historical high in late June. At that time, the company briefly became the world's largest by market cap, with a market cap of $3.3 trillion.

Despite the sharp pullback, Nvidia has risen nearly 120% since the beginning of the year and more than 600% since early last year.

According to a Wall Street news website, from this financial quarter, Google, Microsoft and Amazon have all reported disappointing earnings, with shares of Google and Microsoft falling more than 8% since the announcements, and Amazon falling nearly 9% in one day. This indicates that Wall Street does not believe that splurging on AI will bring returns. As the most obvious beneficiary of generative AI, the cloud computing divisions of the three giants grew steadily in the second quarter, but this is not enough to appease investors, who are increasingly anxious to see returns on investment in data centers and other AI infrastructure.

Barclays recently noted that "FOMO" (fear of missing out) sentiment was on full display during the dot-com bubble of 2000, and that history may be repeating itself in the AI field today. "Spending money on AI" is the big boys' "FOMO," but it is expected that someone will back away next year, although the field is still in its early stages in the long run.