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<p>By Herb Greenberg, Empire Financial Research</p>
<p><strong>Well, that didn&#8217;t take long&#8230;</strong></p>
<p>It has been a mere two months since chatbot ChatGPT came out of nowhere to be everywhere&#8230; and the stock promoters are up to their old tricks.</p>
<p>The &#8220;Dash for Trash,&#8221; as it has been called, is off to the races – this time with artificial intelligence (&#8220;AI&#8221;) as the new hook.</p>
<p>That&#8217;s not to say the other garbage hasn&#8217;t been flying as well&#8230;</p>
<p>The poster child for <em>that </em>might be Carvana (CVNA), which has doubled in the span of a few weeks&#8230; even though its end market is getting blasted and its business model is running on fumes. (I keep wondering, what&#8217;ll ever happen to those silly &#8220;vending machines&#8221; that Carvana built around the country for car deliveries&#8230; Will they be repurposed into multistory trampoline parks? But I digress&#8230;)</p>
<p><strong>But it&#8217;s the AI ties that snared my attention&#8230;</strong></p>
<p>Take SoundHound AI (SOUN), for example. It&#8217;s a member of the 2022 class of broken special purpose acquisition companies (&#8220;SPACs&#8221;). After wallowing at around $1 per share earlier this month, SoundHound&#8217;s stock has roughly doubled on news about its voice-activated AI software after announcing additional financing, &#8220;strong preliminary 2022 results,&#8221; and a deal for a &#8220;customer engagement platform&#8221; to use its software.</p>
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<p>And remember BuzzFeed (BZFD), another busted SPAC? Its stock also doubled to around $2 per share after the company announced it will be using ChatGPT to create quizzes and other content.</p>
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<p><strong>That&#8217;s not to say either of these companies won&#8217;t go on to achieve greatness, because winners will certainly emerge among the broken SPACS&#8230;</strong></p>
<p>But it&#8217;s a stretch, and such big rises on such meager AI news is a clue to beware of the hype – more of which is surely to come.</p>
<p>As far back as November, well before anybody had heard of ChatGPT, <em>Forbes</em> said just that&#8230;</p>
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<p>AI will be one of the next boom bubble busts and it&#8217;s starting to kick off now.</p>
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<p>And just a few weeks ago, with ChatGPT front and center, TechCrunch wrote a story headlined, &#8220;Whoops! Is generative AI already becoming a bubble?&#8221;</p>
<p>The obvious comparison, the story noted, is cryptocurrencies&#8230;</p>
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<p>Miller described the situation as similar to what happened with [non-fungible tokens] and blockchain. The tech&#8217;s allure prompted investors – looking to make sure they didn&#8217;t miss the trend – to pour money into numerous companies regardless of having any real use cases.</p>
<p>He isn&#8217;t the only one to make that connection either. Several other investors said the tech&#8217;s growth has reminded them too much of crypto: Everyone is piling on faster than they should be.</p>
<p>Tyler Griffin, a managing partner at Restive Ventures, drew parallels with how blockchain was treated when the hype was building. &#8220;It has echoes of the early days of crypto: Genuine excitement about a new, fascinating technology, coupled with outrageous predictions of transformative applications that betray a lack of understanding by (often non-technical) people about what&#8217;s really going on,&#8221; he said.</p>
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<p>It&#8217;s also very reminiscent of the dot-com bubble. The TechCrunch story quoted one venture capitalist who added&#8230;</p>
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<p>It can be both true that enormous companies will eventually be built in the space and that aggregate returns on capital for the industry will prove dreadful.</p>
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<p>There is no question that AI, which has been evolving for years, will be huge&#8230; and so will the hype and frenzy surrounding it.</p>
<p>Buyers beware.</p>
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