It’s in the title. I’ve been waiting and hoping for some counterexamples, but I’ve concluded, and I think people need to be ready for the eventuality that the AI bubble is NOT going to burst.
That’s a bold claim, but I’m prepared to back it up.
- Not adopting the AI paradigm is going to become increasingly costly
First of all, it’s not going to not burst because AI is good or useful. In fact, right now, we see lots of companies pushing away from AI because it is unreliable and problematic.
But the alternative costs from the other side are creeping up. If you are a company looking to hire developers to write software, you need to provide development machines to those developers. A development machine that might have cost $2000 a couple years ago is well on the way to $6000-$7000 in the near future.
And that’s small potatoes. Even if you buy those for your developers, who are still highly paid, mind you, the software they’re going to be writing will NOT be for PCs - regular people are NOT going to spend that for a PC. Which means most of the software that’s going to be developed will target iOS and Android… and that’s it. Which will continue to put 30% of all development profits RIGHT back into the locked down AI nightmare ecosystem. It’s a disgusting, negative feedback loop that’s about to accelerate in ways that would’ve made the most nightmarish predictions 5 years ago seem conservative. You might not want to swim in the ocean of crap, but they are actively eating the pier under your feet, and using the bodies that hit the water to take it apart even faster. They are going to change the world in ways that will FORCE you into their system - you don’t get a choice.
- Bubbles don’t HAVE to burst anymore
Tesla hasn’t put out a successful new product in 20 years, and it continues to barrel right along, with its useless hack CEO hanging on as the richest person in the world. The old rules do not apply, and the sooner we acknowledge it, the sooner we can prepare for the new normal.
- NOBODY who is responsible for enforcing anything like responsible economic activity will EVER allow the bubble to burst
WHO is going to allow the bubble to burst? The investors who would lose everything? The SEC that would collapse the entire economy by not turning a blind eye? The captured politicians that are being paid billions to be complicit?
Let’s be clear… the invisible hand of the market, to the extent it ever existed, certainly does not now. The idea the market is fair and responds properly to economic activity requires all actors to act, if not in good faith, at least SELF-INTERESTEDLY against each other as checks and balances on each other to verify the veracity of real claims about the economy. Is ANYBODY deluded enough to think that’s happening? Everyone who could potentially blow the whistle or pop the bubble knows each other and they all have guns pointed at each other’s heads knowing they all go down together. It will NOT be allowed to pop, and if that means making up numbers out of whole cloth, it’s going to happen. If people won’t rise up when their pedophile president is murdering people in the streets, they’re certainly not going to when OpenAI claims 1 trillion in profit out of nowhere. Add to the fact that small investors who MIGHT get skittish are SUCH a small and irrelevant piece of the pie in these economic transactions that even if they all pulled out, the machine could not be stopped, and you realize that there is no stopping this nightmare.
It’s not going to pop. Barring a revolution, we are on an inexorable course to the most awful tech dystopia imaginable. And even revolution is unlikely to be enough. Most people are so addicted to corporate tech that they’re more likely to link arms and defend the headquarters of their favorite social media than take up arms against it. Make no mistake… the end of consumer facing open hardware is not a temporary redirection of resources to a failing bubble - it is a complete shift in the entire paradigm of how people use technology, bringing it under the complete control of a very few. This is not the latest salvo in an ongoing battle - it is the final bomb that has ended the war, and there’s nothing left but slow attrition until personal computing and the very concept of devices you own and control sit in the dustbin of history with cars you could work on yourself.
I want nothing more than to be wrong. I am not happy to doomsay here. But to pretend this is some kind of blip in a machine that’s going to stabilize someday is to ignore every single bit of functioning pattern recognition I have.
I don’t have a good conclusion. I guess - hug your families, hoard what tech you can, and maybe make offgrid plans now. Good luck to all of us.
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I disagree. This is so much like the dot com era. I mean much like dotcom the web did not disapear and ai won’t disapear when ai busts. Bust just means recognition of the lack of return and a massive crash in the stocks.
Tell me you’re not an economist without telling me you’re not an economist.
I think there will be a time when it costs too much to keep a data center safe and operational.
I went to a town meeting where someone is pushing to get one of these data centers built. People are not happy about this. Nobody supports it. And when it gets built anyway, there will be a bunch of people who suddenly can’t afford their electric or water bills, and there’s a very definite and universally hated reason why those bills are suddenly so high. That reason has a physical location and an address, along with a lot of vulnerable infrastructure.
I went to that meeting expecting to be the only person against the data center. I was wrong. People are mad.
There is also this.
Tl;dw is that these data centers produce a ton of inaudible low frequency infrasound (think that feeling in your chest from a subwoofer) which can have health effects, especially with prolonged exposure.
Basically this guy recorded sound and infrasound and tested the neighborhoods around data centers vs. West Texas where all of the oil drilling and fracking activity is vs. normal places. The data centers were producing massive amounts of infrasound 24/7 and neighbors were really pissed. Multiple reports of health concerns from it. It was more than the areas of drilling and fracking in TX.
One of my favorite moments of the video is when he is at someone’s home near the data center and discussing the situation and he lays the camera down on the floor and the video feed begins to visibly vibrate.
Oh what fun, so the whole thing vibrates too.
The internet bubble was not about internet never being successful. It was a financial investment bubble based on overinvestment/inflated share values far beyond the profit extraction power of those companies. Pets.com is a posterchild of business model absurdity. Worldcom and CISCO also crashed due to absurd hype overinvestment levels. The housing/GFC bubble was not the end of housing or banking.
There is a similar bubble in AI investment, where LLM models have zero competitive moat, and cannot ever make money, where datacenter competition is rising faster than demand, and also cannot make money based on economic value, because of competitive pressure.
The only hope for AI surviving a financial bubble is the US government buying all the excess datacenter compute for surveillance and military skynet. This is extremely likely if only to ensure Zionist supremacist rule over the US, but also because the US is desperate to pick one last sector of competition with China, before losing at everything. Zionist supremacist rule over America political establishment unanimity, is matched by warmongering supremacy ambitions against China led multipolarism/global south.
The only alternative to an AI bubble, is an everything else collapse, and US bankruptcy Skynet led genocide of Americans for US establishment supremacy objectives instead of “machine supremacy”. There can never be any threat to Zionist/warmongering supremacism in America, and you will all die before any shift to humanism/freedom dividends/UBI occurs.
This was clearly written by an AI chatbot and is complete bullshit.
Collectively burning tens of billions per month for negative ROI. The quarters will start turning red, investors sell, prices tank, covenants are violated, margins are called. Etc etc. plus throw in a few more Salesforce stories where they fire people, ai screws up and they publicly have to rehire and admit it was a mistake or moltbook style vibecoded disasters.
Just like .com bubble, it doesn’t kill the tech, just the people that overinvested in infra for something that is only growing organically and will soon hit a natural plateau in improvements.
- Bubbles don’t HAVE to burst anymore Tesla hasn’t put out a successful new product in 20 years, and it continues to barrel right along, with its useless hack CEO hanging on as the richest person in the world. The old rules do not apply, and the sooner we acknowledge it, the sooner we can prepare for the new normal.
But it sells a useful product?? It sells an electric car and sells the only one that governments seem to be aware exists, since all the charging infrastructure is for Teslas.
So there was this Roman empire…
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Barring a revolution, we are on an inexorable course to the most awful tech dystopia imaginable.
Sounds like a call to action…
WHO is going to allow the bubble to burst? The investors who would lose everything? The SEC that would collapse the entire economy by not turning a blind eye? The captured politicians that are being paid billions to be complicit?
I don’t think you understand how bubbles burst. They don’t burst because someone allows them to burst, they burst because someone runs out of money. When investors back off, money runs out. OpenAI is the weak link in this entire circle jerk, and Nvidia and Microslop has just backed down on their hundred billion dollar deals with them.
Indeed. It’s the chaos that is released when people can’t hold the lie together any more. I think a better analogy would be a dam bursting.
The same greed that created the bubble, will burst it. Some are buying stocks to increase their wealth, others are shorting stocks to increase their wealth. The ones buying the stocks will soon run out of money to invest into a technology that doesn’t return any profits.
Sorry chief. Just not convinced of your argument at all.
Not adopting the AI paradigm is going to become increasingly costly
Why do dev machines cost $7k now ? Can someone who works for a large software development company confirm ?
Honestly I’d have thought things are going the other way. My laptop that I purchased for $500 several years ago is a great daily driver. I dabble in development, some is local, but LLM stuff is offloaded to an inference API, or a bare metal server which I rent.
I understand that sophisticated development companies aren’t buying second hand laptops, but I don’t think there’s a sudden imperative to buy everyone $7k dev machines every year.
Bubbles don’t HAVE to burst anymore
You haven’t really offered much to support this assertion.
I can assure you that any bubble will burst if there’s an interruption in shareholder sentiment.
Things aren’t going so well for Tesla lately. It’s interesting that their CEO is sinking many millions into conservative political campaigns.
NOBODY who is responsible for enforcing anything like responsible economic activity will EVER allow the bubble to burst
That’s not how bubbles are maintained though.
Right now, everyone’s pension fund has invested in the “magnificent 7” because frankly, no one can afford not to.
Everyone knows the shares in these companies are overvalued, but no one knows by how much, and no one knows when the correction is going to come.
I want the AI bubble to pop, but as time goes on, I increasingly believe it will not. At least not without being tied to another major collapse.
Can someone who works for a large software development company confirm ?
I work for a large software development company that initially was very hesitant about AI anything, but has since gone whole hog because everyone else is doing it. To run our stack locally and debug interactions between services requires a machine that costs about 50% more than it did a year or two ago and they are not in stock at the moment. Storage and memory costs are insane. We are partially offloading the development stack to the cloud now, so expect to pay more for the server you rent as you compete with us for resources.
In the hands of a competent developer, anthropic’s models for instance, are pretty good in my experience. In the hands of an incompetent developer, they are a nightmare. Tuning base prompts has helped us stem the flow of garbage from weaker colleagues to a manageable level, and continuing that work seems to be improving things incrementally. I can foresee having a library of prompts for the whole organisation for each common thing we want to do. I expect that model owners will inevitably steal those prompts since they are in the position to observe them, and they’ll use them to improve models to where they better intuit what you are asking for and use better patterns by default. I also expect tooling to change to assist models, probably to the point that they will be AI first.
But it’s clear to me that everything is changing for better or worse, regardless of what anyone thinks of it. As for what corporate thinks, it remains to be seen if competence is valued, or if “close enough is good enough”, will suffice.
I don’t expect anthropic or anyone else in the AI space to stop iterating on models of any kind. I do expect anthropic’s (and others in the space) goal to be to get the models to a point where not using them will be a net disadvantage when trying to compete in the software development space. Then they will up the price, and use fiddling to keep the price just below where it makes sense to hire another developer, in order to suppress those wages.
Moving on from there, I expect them and others in the AI space to be training models for all kinds of things, which will end up suppressing wages in other industries. Whether that is even possible remains to be seen, obviously, but it won’t stop them from trying. Success (if any), or even the perception of it, in the software development space will spurn others to try the same thing but somewhere else.
Bubbles don’t HAVE to burst anymore
You haven’t really offered much to support this assertion.
They are right, bubbles do not have to burst anymore. The housing bubble is one example. The stock market basically only going up is subject to the same forces. Economist Gary Stevenson explains. TL;DW, once rich people reach a certain wealth threshold, they have nowhere to put profits except to reinvest, which begets more profits, and so on, until they outcompete you for those assets. Once they buy up as much as is available for one asset class, they move to another. This is why housing and the stock market keep going up and up. They will even invent new asset markets to pull more money from people: see what’s happening to veterinarians for instance.
I can assure you that any bubble will burst if there’s an interruption in shareholder sentiment.
Who are shareholders? I’ve heard that 80% of the stock market is owned by the 1%. And 90% of the stock market is owned by the top 10%. Even if none of that is true, what is close to the truth? 50-60%? That’s still too much, and how long would it take them to reach those higher numbers anyway? Besides, if the majority shareholders already have more money than they could ever spend, why do they even need to change their sentiment?
It’s interesting that their CEO is sinking many millions into conservative political campaigns.
To preserve the status quo, preventing anything that stops his gravy train. The same train that is causing all of this.
Right now, everyone’s pension fund has invested in the “magnificent 7” because frankly, no one can afford not to.
Absolutely. Everyone’s pension has been swept along into this system, and held for ransom and to beat us with at the same time.
The bubble is being maintained by not taxing those who have more money they can ever spend. They reinvest it. The profits they end up with don’t come from nowhere, that money has to come from somewhere, and there’s only so much money in the system. If you follow that path, you come to know how the monetary system works, and why we inevitably have to print money to keep the system going (it’s a function of the system). Printing money causes inflation. The money funding this whole situation is essentially coming from all of us, stolen fractionally by inflation. The bubble won’t stop until people have nothing left and/or are no longer able to function (societal collapse), or we tax billionaires and begin to fix things. We have a hard road ahead either way. Good thing it’s so necessary to create Bigfoot blog videos, we couldn’t live without them.
Its good for an unpopular opinion.
Counter point: a boat got turned a bit sideways in a canal and the entire financial system almost came crashing down and there were no bunnies for Easter.
My point is that very small, unknown things can cause huge interruptions to global functioning, and almost everything about the current bubble depends on a very stable global order, where specifically, the west, has access to the chips, when the west does not manufacture them in spite of whatever agreements are on paper.
A small shock to the supply chain and it all falls down.
Appreciate both the perspective and the good faith interpretation of my opinion.
Good reply. ❤️ Sorry to highjack here but I see this concept of good faith and bad faith sometimes and I wonder what a bad faith reply would/could look like?
you are simply wrong. you absolute buffoon, you complete dingbat, you utter moron!!!1!1!111!!
Eh. I think bad faith usually means committing logical fallacies on purpose just to win an argument. I.e. you don’t care about the truth or a greater good, you just say anything it takes to “win”. It’s usually more deceptive than name calling.
I agree that company fundamentals don’t matter, and that the goal right now seems to be techno-feudalism.
Retail is ~40% of the stock market, and retirement is ~20%. I think it will pop whenever the next recession starts. If enough people lose their jobs, and start selling their stocks and dipping into their retirement to pay bills, these stocks will tank. It’s my theory that these stocks are held up by all the people passively investing in index funds following the SP500 and NASDAQ. During any small sell-off by active investors, a lot of people’s retirement plans will eventually automatically just buy and slowly bring it back up.
A scare, widely reported by media, could also cause people to take enough notice where a lot of people manually adjust their plans. But, yeah, the media is pretty captured now, and will avoid reporting on stuff that could cause scares.
