Op-ed: The fuel for the AI boom driving the markets is advertising. It is also an existential risk.

The recent launch of OpenAI's AI browser has intensified the ongoing AI investment race, with capital expenditures reaching unprecedented heights. This surge in funding, estimated in the hundreds of billions, is increasingly linked to future chip purchases, raising concerns that we might be witnessing a bubble. A Harvard economist projects that a staggering 92% of GDP growth in the first half of 2025 will be driven by AI investments. However, the intricate relationship between this rapid influx of capital and the underlying business models that support our economy, particularly the advertising technology sector, remains largely unexplored. Over the past quarter-century, the internet has been meticulously designed to maximize advertising revenue. Google’s Search Engine Marketing stands out as one of the most successful business models ever created, closely followed by Meta’s engagement-driven advertising and Amazon’s retail advertising, which, while a smaller segment of its revenue, contributes significantly to its profits. The ripple effects of this advertising boom are evident as nearly every major retailer has developed their own retail media networks, substantially boosting the profitability of giants like Walmart, Kroger, and Uber. AI has been instrumental in refining these advertising strategies, enhancing everything from search functionalities to personalized recommendations, ultimately seeking to capture a larger share of overall commerce. These three colossal corporations—Google, Meta, and Amazon—primarily rely on advertising for their profits. They are now channeling a portion of their lucrative advertising revenues into infrastructure investments not seen outside of wartime government spending. Paradoxically, the latest AI advancements could also threaten the very advertising ecosystems that sustain them. AI has the potential to revolutionize search (Google), shopping (Amazon), and entertainment (Meta) by delivering information and content in ways that bypass traditional advertising methods. If AI poses an existential risk to established advertising models, why are these tech giants so heavily invested in AI? The ultimate goal may be to achieve Artificial General Intelligence or Super Intelligence, which could unlock immense value and far exceed current investments. Yet, there is a pressing need to safeguard or disrupt the advertising frameworks that underpin these companies' valuations and investments before a competitor does. Interestingly, while the foundational paper, "Attention is All You Need," was authored mainly by Google researchers, it was OpenAI and Microsoft that propelled the current AI race, operating with less reliance on traditional advertising models. Sam Altman has even characterized the AI-driven advertising systems of major platforms as "the first at-scale misaligned AIs," indicating the areas he believes OpenAI aims to disrupt. Today’s environment differs notably from the dot-com bubble of 2000, primarily because the firms driving this investment wave are some of the most profitable in the world. So far, there are no signs of vulnerabilities in the advertising business models that fuel both their investments and market capitalizations. However, should AI successfully disrupt these advertising frameworks, the economic and market implications could be far-reaching and profound. While Google, Meta, and Amazon are well-positioned to innovate new business models and have successfully integrated AI into their advertising strategies, fundamentally transforming how users interact with online search, commerce, and content will necessitate the development of entirely new revenue models—hopefully ones that align better with user needs and are not solely advertising-based. Ultimately, the justification for investing in AI infrastructure may extend beyond just unlocking new revenue streams; it may also be about protecting the business models that constitute a significant portion of the market value of public companies, a fact that many may overlook.