The AI trade has hit a temporary roadblock, according to Rich Privorotsky, head of Delta 1 at Goldman Sachs. In an interview with Bloomberg, Privorotsky shared his insights on why the AI market has slowed down in recent times. Here are the key factors he highlighted:

1. MIT Paper: A recently published paper by MIT researchers argued that most AI projects are not yielding positive returns. This paper gained significant traction and contributed to the current sentiment around AI.
2. Meta’s Hiring Slowdown: While not a significant event in itself, Privorotsky notes that Meta’s hiring slowdown has had an impact on investor sentiment.
3. Overhyped ChatGPT-5: Privorotsky believes that the latest iteration of ChatGPT was overhyped and failed to deliver on expectations. This may have contributed to the current stall in AI investment.
4. Altman’s Bubble Comments: Privorotsky mentions that Tim Altman’s comments about the AI market being in a bubble did not help investor sentiment.
5. Apple’s Paper on LLMs: Privorotsky notes that Apple’s recent paper reiterating that large language models (LLMs) don’t actually “think” added to the mood of caution around AI investment.

Despite these challenges, Privorotsky remains bullish on the technology. He believes that the next wave of innovation will come from quantum computing or more elegant innovations. However, he acknowledges that there may be a need for a reset before this next wave emerges.

While the AI trade has stalled in the near term, Privorotsky remains optimistic about the long-term potential of the technology. As always, it’s important to approach investments with caution and to keep an eye on market sentiment and trends.