Still, given the extent of spending on AI, it still needs a viable business model beyond subscriptions, which won’t find a way to drive profits from billions of individuals’s eyeballs just like the ad-driven businesses which have defined the last 20 years of the web. Even the most important tech corporations know they should ship the world-changing agents they keep hyping: AI that may fully replace coworkers and complete tasks in the actual world.
For now, investors are mostly buying into the hype of the powerful AI systems that these data center buildouts will supposedly unlock in the longer term. Sooner or later the most important spenders, like OpenAI, will need to point out investors that the cash spent on the infrastructure buildout was value it.
There’s also still loads of uncertainty in regards to the technical direction that AI is heading in. LLMs are expected to stay critical to more advanced AI systems, but industry leaders can’t appear to agree on which additional breakthroughs are needed to realize artificial general intelligence, or AGI. Some are betting on latest sorts of AI that may understand the physical world, while others are focused on training AI to learn in a general way, like a human. In other words, what if all this unprecedented spending seems to have been backing the unsuitable horse?
The query now
What makes this moment surreal is the honesty. The identical people pouring billions into AI will openly inform you it would all come crashing down.
Taylor framed it as two truths existing directly. “I feel it’s each true that AI will transform the economy,” he told me, “and I feel we’re also in a bubble, and loads of people will lose loads of money. I feel each are absolutely true at the identical time.”
He compared it to the web. Webvan failed, but Instacart succeeded years later with essentially the identical idea. If you happen to were an Amazon shareholder from its IPO to now, you’re looking pretty good. If you happen to were a Webvan shareholder, you almost certainly feel in a different way.
“When the dust settles and also you see who the winners are, society advantages from those inventions,” Amazon founder Jeff Bezos said in October. “That is real. The profit to society from AI goes to be gigantic.”
Goldman Sachs says the AI boom now looks the best way tech stocks did in 1997, several years before the dot-com bubble actually burst. The bank flagged five warning signs seen within the late Nineties that investors should watch now: peak investment spending, falling corporate profits, rising corporate debt, Fed rate cuts, and widening credit spreads. We’re probably not at 1999 levels yet. However the imbalances are constructing fast. Michael Burry, who famously called the 2008 housing bubble collapse (as seen within the film ), recently compared the AI boom to the Nineties dot-com bubble too.
Perhaps AI will save us from our own irrational exuberance. But for now, we’re living in an in-between moment when everyone knows what’s coming but keeps blowing more air into the balloon anyway. As Altman put it that night at dinner: “Someone goes to lose an outstanding sum of money. We don’t know who.”
