Technology

It's a bubble because OpenAI spend $2.35 for every $1.00 they make. Yes, you're mathing right, that is a net loss.

It's a bubble because all of the big players in AI development agree that future models will cost exponentially more money to train, for incremental gains. That means there is no path forward that doesn't intensely amplify the unprofitability of an already deeply unprofitable industry.

It's a bubble because newer models with better capabilities only cost more and more to run.

It's a bubble because as far as anyone knows there will never be a solution to the hallucination problem.

It's a bubble because despite investments treating it as a trillion dollar industry, no one has yet figured out a trillion dollar problem that AI can solve.

You're trying on a new top of the line VR headset and saying "Wow, this is incredible, how can anyone say this is a bubble?" Its not about how cool the tech is in isolation, it's about its potential to effect widespread change. Facebook went in hard on VR, imagining a future where everyone worked from home while wearing VR headsets. But what they got was an expensive toy that only had niche uses.

AI performs do well on certain coding tasks because a lot of the individual problems that make up a particular piece of software have already been solved. It's standard practice to design programs as individual units, each of which performs the smallest task possible, and which can then be assembled to complete more complex tasks. This fits very well into the LLM model of assembling pieces into their most likely expected configurations. But it cannot create truly novel code, except by a kind of trial and error mutation process. It cannot problem solve. It cannot identify a users needs and come up with ideal solutions to them. It cannot innovate.

This means that, at best, genAI in the software world becomes a tool for producing individual code elements, guided and shepherded by experienced programmers. It does not replace the software industry, merely augments it, and it does so at a cost that many companies simply may not feel is worth paying.

And that's its best case scenario. In every other industry AI has been a spectacular failure. But it's being invested in as if it will be a technological reckoning for every form of intellectual labour on earth. That is the absolute definition of a bubble.