On Monday, Google’s parent company, Alphabet, became the fourth company to reach a market value of $3 trillion, and every member of this exclusive club has something in common.

All it took was a rather small 4% rise in shares for the tech giant to hit the coveted stock market benchmark. Rather unsurprisingly, the three previous winners of that title—Nvidia, Microsoft, and Apple—are all titans of the tech industry that have been riding the wave of investor interest in AI, as well.

Alphabet stock had a great start to September after a federal judge concluded earlier this month that the tech giant could keep Chrome despite its monopoly in internet search. The judge’s reasoning for that was that generative AI would eventually pose “a meaningful challenge to Google’s market dominance.”

Google is trying to get ahead of that “meaningful challenge” by fusing AI into its search engine and pouring billions into developing its AI offerings, including its own AI chatbot Gemini.

It seems that investment cashed out for the company. As of Monday morning, Google Gemini is now the number one free app on Apple’s App Store, relegating OpenAI’s ChatGPT to number two status and giving the much-needed push to the company’s stock.

The AI hype is inextricably and intricately linked to the significant stock market returns that these tech giants, and many others, have experienced this year. The trillion-dollar question: Is there an AI bubble?

AI hype driving major gains

The best example of AI hype delivering trillions of dollars of financial gain is perhaps Nvidia, the ultimate AI darling of the stock market. Due to its immense market share in AI chips and the meteoric rise it experienced thanks to the technology, the company is largely considered the face of the AI hype.

Earlier this summer, Nvidia made history as the first company to ever hit $4 trillion market valuation.

Apple, considered the least AI-savvy of the four companies to breach the $3 trillion benchmark, was the first company to ever be worth $3 trillion but is still yet to hit $4 trillion. Meanwhile, both Nvidia and Microsoft have outperformed Apple and already reached that milestone. Microsoft’s breach of the $4 trillion benchmark was also thanks to AI.

Late July, Microsoft posted an earnings report that showed stellar revenue for its cloud computing platform Azure. The stock move following the report pushed Microsoft briefly above $4 trillion market value.

Fellow cloud infrastructure provider Oracle also benefited greatly from an AI-demand-driven stock move. Chairman Larry Ellison became the richest man on Earth last week after Oracle stock skyrocketed more than 42% on news that the company expects to collect half a trillion dollars (and potentially billions of dollars more) in the coming quarter on AI deals alone.

Is there a bubble?

All this is great news for tech companies and their financial metrics, but is it substantiated? That question has been plaguing investors for some time now.

According to some experts (and OpenAI CEO Sam Altman), there is indeed an AI bubble.

“Are we in a phase where investors as a whole are overexcited about AI?” Altman said last month in a dinner with journalists, according to The Verge. “My opinion is yes.”

An AI report from MIT fueled those worries further just a few weeks ago. The researchers shared that despite the push to scale AI in the corporate world, fewer than one in ten AI pilot programs have actually generated revenue gains.

AI is currently deployed mostly by larger firms in select fields. But even there, AI adoption is now declining, according to the latest U.S. Census Bureau findings.

If AI is indeed in a bubble, the burst could be catastrophic. So much is riding on the AI wave right now, including the entire U.S. economy.

In a paper published in July, Fed researchers said that if AI demand does not scale proportionally with investment, it can lead to “disastrous consequences,” and compared it to the railroad over-expansion of the 1800s and the economic depression that followed. Also in July, economist Torsten Slok called the AI bubble of today even worse than the 1999 Dot-com bubble.

Analysts have characterized the recent strength in the stock market as an AI rally, but flying under the Magnificent Seven’s radar is Walmart — a company so vast that it literally has its own weatherman.

And as it turns out, the retail juggernaut’s scale and reach are proving to be tremendous assets in the AI race.

That’s because most top AI companies — like OpenAI, Microsoft, Anthropic, or Meta — operate in a primarily virtual space, processing unfathomably complex rivers of information into more digital information. AI-adjacent companies like Nvidia, Intel, and Oracle focus on providing the physical infrastructure upon which the AI machines function. Then there are the companies that are using digital intelligence to deliver physical results through automation and augmented experiences, like Tesla and Amazon.

Walmart, by contrast, has a vast and complicated set of physical challenges to solve as the largest retailer in the US — and the world. Those include everything from cleaning up spills in the dairy aisle to stocking shelves.

“We move billions of items around every month, every year,” Walmart US CEO John Furner said Tuesday at the Fortune Brainstorm Tech conference. He said the company has been developing machine learning tools and other automation projects since around 2015.

Furner said that the company’s AI models and supply chain automation help plan inventory to arrive at the right aisle at the right time, for example. One technique involves creating “digital twins” of each facility to model the movement of merchandise through the system on its way to customers.

Furner also said store associates increasingly have an AI chatbot handy via their handheld devices to help them better set priorities and help customers.

“It’s a combination of people being powered by technology. There’s a lot of judgment to retail and decision-making. And we’re in a very dynamic industry,” he said. “We think this next phase of physical AI in combination with Gen AI is going to be really helpful.”

The company’s head of e-commerce, David Guggina, told the Goldman Sachs Communicopia and Tech conference last week how AI is helping his team run experiments and fulfill orders at an increasingly rapid rate.

Guggina said his team is now able to work at breathtaking speed behind the scenes, too.

“What took a data scientist days or weeks before can now be done in minutes,” he said.

AI also helps ensure that each of the company’s 4,700 stores has the kinds of products best suited to their local markets, slashing delivery times to minutes after a customer places an order.

“We’ve just completed the third inning,” he said by way of the classic baseball game analogy. “So we’re still early with regard to our automation journey in the fulfillment network.”

These digital-to-physical uses of AI are also complemented by a myriad of “micro agents” that handle tasks like tracking local event calendars or monitoring inventory levels.

Walmart, of course, is still fine-tuning its AI approach, and there have been hiccups.

The proliferation of bespoke Walmart-made AI agents eventually started to confuse users, the company told the Wall Street Journal.

The company has rolled many of those micro agents into four “super agents” designed to assist shoppers, merchandisers, programmers, and third-party marketplace sellers.

Still, because Walmart’s 20,000-strong global tech team builds so many of these digital and physical solutions in-house, the company is emerging as an unexpected AI powerhouse.

The company snagged former Instacart exec Daniel Danker in July to accelerate its AI efforts.

It’s also deepening its partnership this month with OpenAI via a new training program for associates and enterprise access to ChatGPT tools for frontline Sam’s Club employees to help operate their warehouse stores more smoothly.

After all, while chatbots might sometimes hallucinate answers, there’s no faking a cold gallon of milk on your doorstep.

MBW Reacts is a series of analytical commentaries from Music Business Worldwide written in response to major recent entertainment events or news stories. Only MBW+ subscribers have unlimited access to these articles. The below article originally appeared in Tim Ingham’s latest MBW+ Review email, issued exclusively to MBW+ subscribers last week.

So. What are we going to do about it?

MBW reported Thursday (September 11) on some startling new statistics from French streaming service Deezer.

Important: Deezer might be a relative minnow in global streaming terms, but its catalog-ingestion patterns broadly reflect the rest of the DSP world.

Deezer said that its service is now absorbing over 30,000 new, fully-AI-made music tracks per day.

That volume accounts for 28% of the total uploads reaching the service every 24 hours.

Think on this: The 28% stat is up from 10% in January, and 18% in April.

Sorry to shriek, textually speaking, but I’m going to put this next bit in red, because someone has to.

At that rate of growth, fully-AI-made tracks will account for more than 50% of all new music hitting streaming services by the time the 2026 World Cup swings around.

So.

What are we going to do about it?

One place we can start is by refusing to swallow the nonsense.

The tech utopian argument on this topic always comes back to… let the customer decide.

Examples:

• If someone loves a 100% AI-generated track, what’s wrong with that? Why should human-made pop music automatically get elevated beyond machine-made audio?
• Also, how dare the music industry tell a tone-deaf logistics manager, expressing himself with a few clicks of a mouse on Suno, that he’s not a ‘real musician’? Haven’t your oh-so-human A&Rs and producers gotten hooked on autotune and machine-learned trickery in the studio for the past decade? Chasing half-interested and bot-driven streams to win a race of your own making?

Fair points.

But what’s this?

“Deezer has found that up to 70% of the streams generated by fully AI-generated tracks are in fact fraudulent.”

Ah. So now we know: the primary motivation for consumption of this Suno/Udio-made ‘slop’ isn’t, in fact, because it’s great.

Nor is it out of respect for an innovative new form of creative expression.

It’s because there’s a racket to be exploited.

It’s because of that most human thing: greed.

Deezer’s 70% fraud stat shows the lie to a claim from Suno’s VC investor, Lightspeed Partners, that the platform is making music “more inclusive, creative, and rewarding for everyone involved”.

More rewarding?!

Try telling that to the artist having her streaming royalties sucked away by bot-made, bot-consumed, audible tripe.

To Deezer’s credit, once its platform detects this kind of fraudulent activity, it blocks those streams from its royalty pool. The service also blocks 100% AI tracks from algorithmic recommendations and editorial playlists.

Are other music services being as vigilant? Perhaps not.

Remember that Amazon recently integrated Suno directly into Alexa, two months (!) after publicly stating that Amazon Music would “address unlawful AI-generated content”.

Wild. Like opening a liquor store outside Alcoholics Anonymous.

So. What are we going to do?

Let’s start at the start.

This isn’t about debating the creative merits of robot symphonies. It’s about wiping out a new, and rapidly escalating, form of fraud.

A good start would be cross-platform tech collaboration on anti-fraud activity, coupled with a strict set of industry anti-fraud standards at DSPs.

Beyond that, harsher financial punishments for those distributors pushing torrents of AI slop onto DSPs while promising not to do so.

Especially when that AI slop is then being rinsed by bot-farms.

Happily for those clinging on to hope for humanity… there was some good news buried in Deezer’s latest data: human listeners, real listeners, are largely rejecting AI-made music.

Deezer says that despite those 30,000 daily AI uploads, just 0.5% of streams on its platform today are of fully-AI tracks.

Omit the 70% of those streams that have been deemed fraudulent, and it means just one in every 700 plays on the service are of robot-made music.

It obviously helps that Deezer blocks fully-AI tracks from its editorial and algorithmic playlists/recommendations.

But let’s not coddle ourselves into thinking there isn’t a giant problem brewing.

In plain terms: There are now 10 million+ fully-AI tracks hitting music streaming services each year. And Deezer’s stats suggest nearly three-quarters of the plays of these tracks are from bot farms.

While we debate whether AI tunes have ‘artistic value’ (and while major record companies simultaneously sue, and negotiate with, Suno/Udio), industrial-scale fraudsters are attempting to systematically loot music’s core machinery.

Lightspeed Partners claimed last year: “Suno is shifting the world of music towards one in which more and more people can express their creativity through music.”

According to Deezer’s data, its output is also shifting the economics of music further and further into the arms of sharks, grifters, and thieves.

Music Business Worldwide