Bottom Line Up Front: DuckDuckGo made waves this week by surveying its users about the future of AI and search. The question was simple: Do you want AI in search or not? Possibly to the surprise of many, the survey results weren’t even close. Users overwhelmingly rejected AI, with over 90% of the +110,000 respondents marking “No.” DuckDuckGo remade the poll on X, and 85% of users there said “No” to AI. With such an overwhelming response, this might lead many in the AI space to consider what it means for the technology as an investment thesis and for the millions being poured into it.
The Details: Trillions have either been spent or committed to the buildout of AI and AI infrastructure. The biggest companies in the world, like OpenAI, Nvidia (NVDA), Meta (META), Alphabet (GOOG) (GOOGL), and Amazon (AMZN), are all in a race to become the No. 1 player in the AI space. But consumer tides might be shifting. What was once seen as a cool and useful tool is increasingly being rejected by consumers.
Currently, AI is being used to replace (or “enhance”, as the optimists would say) writers, artists, news companies, videographers, and other art forms. But this isn’t what people want. Millions of artists across the world already had to deal with content theft, but now they have to deal with endless accusations of using AI. Social media has become inundated with AI “slop,” as it’s often called, where AI bots are talking to other AI bots.
In a previous interview, OpenAI founder Sam Altman said that the things that are “deeply human” will remain important in the age of AI, while mundane tasks will be automated. Consumers are rejecting AI because the opposite is becoming true. Those things that are deeply human, like art, are being targeted first and exclusively. AI can’t do my dishes, clean my laundry, or organize my house. But it can take my writing and then spit out an AI summary without a human ever reading it.
Swarms of consumers are even boycotting movies, games, and other art-heavy industries when projects admit to, or are discovered to be using, AI.
What Does This Mean for AI Stocks?
If you believe what Elon Musk and other proponents are saying, there’s no stopping the AI revolution.
Given that many of these companies’ stated goal is to automate every task with AI to the point where the government will be forced to issue stipend checks, it’s not hard to see why people are rejecting AI. But companies have made it clear for years, through offshoring or virtual work, that they’re happy to lay off employees if they can get labor cheaper.
Amazon has been slowly hiring more robots and fewer workers for years now. If Amazon can get a bit more value for its shareholders by automating a task for $0.30 (after spending the upfront $500 billion on infrastructure) with AI instead of paying an employee $20 an hour, it will, and there’s no stopping that from happening.
Google has increasingly been driving thousands of small businesses, and even large news agencies, out of business with its AI overviews. Traditionally, news companies would get clicks from Google, which results in advertising revenue. But with AI overviews, nobody gets traffic, killing many businesses. But Google has reported that this increases engagement on its platform and keeps users on Google longer, so it’s worth it, and there’s nothing these affected companies can do to stop it from happening. Google does not even allow users to turn off AI overviews and similar features, so unless people start using alternative browsers like DuckDuckGo or Brave en masse, nobody can stop that either.
This shows the inevitability of AI and likely means it is here to stay. But there’s one asterisk to this: Large Language Models (LLMs).
The AI Race to the Bottom
AI is largely separated into LLMs and “real-world” AI. Tesla (TSLA) and Alphabet’s Waymo work on self-driving cars is perhaps the most well-known example of real-world AI. Amazon’s aforementioned robotics push is another. Investors don’t have to worry too much about the economics of these projects because the value proposition is clear, and there’s only a handful of players with a real shot on goal.
But LLMs specifically are increasingly in a race to the bottom, with that value proposition fading. Most AI users don’t pay for it, and many of the largest companies offer models for free. Losing billions when most users don’t pay isn’t a winning model, especially when every major company has its own AI model, each roughly the same quality. Add in boycotts, and the investment thesis is looking less and less promising.
LLMs currently only provide value for text, images, and video. This is the brunt of the anti-AI movement because it infringes so heavily on those art-based aspects. For those who have used LLMs, it often takes just as much time to prompt the AI and edit the result as it would to just write it yourself. The resulting product is also worse, and often still noticeably “AI.” Despite years of progress and billions spent, quality is only marginally improving, with updates now rolling out only a few times per year.
It’s not all doom and gloom, though. Nvidia, for example, has openly stated that it requires all employees to use AI. Across the board, many employees are effectively required to use AI due to the productivity gains. If you’re not using AI and it’s making you the lowest-performing employee, you’re first on the chopping block. This means LLMs will remain an integral part of corporate America.
But poor economics, tough competition, growing calls for boycotts, and a questionable value proposition mean the investing thesis for any individual LLM is looking worse by the day.
Nvidia Investors
Nvidia isn’t just a bet on LLMs. It has powered nearly every technological breakthrough of the 21st century. From crypto and cloud computing to LLMs and self-driving cars. If one of those goes bust, Nvidia might take a hit, but the long-term trajectory remains intact. And even with the above issues, LLM investment shows no signs of slowing down.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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