Still, given the level of spending on AI, it still needs a viable business model beyond subscription, which won’t be able to profit from the eyeballs of billions of people like the ad-driven businesses that have defined the last 20 years of the Internet. Even the biggest tech companies know they need to deploy the world-changing agents they keep hyping: AI that can completely replace co-workers and complete tasks in the real world.
For now, investors are mostly buying into the hype of the powerful AI systems these data center buildouts will unlock in the future. At some point big spenders like Openai will need to show investors that the money spent on infrastructure build-out is worth it.
There is still a lot of uncertainty about the technological direction in which AI is headed. LLMS is expected to remain critical to more advanced AI systems, but industry leaders cannot agree on what additional developments are needed to achieve artificial general intelligence, or AGI. Some are betting on new types of AI that can understand the physical world, while others are focused on training them to learn in a more general human-like way. In other words, what if all this unprecedented spending is backing the wrong horse?
Now the question
What makes this moment real is honesty. The same people pouring billions into AI will openly tell you that it can all come crashing down.
Taylor framed this as two truths existing at the same time. “I think it’s both true that AI will change the economy, and I think we’re also in a bubble, and a lot of people are going to lose a lot of money. I think both are absolutely true at the same time,” he told me.
He compared it to the Internet. Webvan failed, but Instacart succeeded years later with essentially the same idea. If you’ve been an Amazon shareholder since its IPO, you’re in pretty good shape. If you were a Weiboan contributor, you probably feel differently.
“When the dust settles and you see who the winners are, society benefits from these innovations,” Amazon founder Jeff Bezos said in October. “That’s the reality. The benefits to society from AI are going to be huge.”
Goldman Sachs says the AI ​​boom now looks the way tech stocks did in 1997, years before the dot-com bubble burst. The bank flagged five warning signs seen in the late 1990s that investors should watch now: investment spending, declining corporate profits, rising corporate debt, Fed rate cuts, and widening credit spreads. We may not be at 1999 levels yet. But the imbalance is building fast. Michael Berry, who famously called the collapse of the 2008 housing bubble (as seen in the film Very short, Recently compared AI boomed even in the dot-com bubble of the 1990s.
Maybe AI will save us from our irrational happiness. But for now, we live in a moment when everyone knows what’s coming but blows more air into the balloon anyway. As Altman told him that night at dinner: “Somebody’s going to lose an extraordinary amount of money. We don’t know who.”
Alex Heath is the author Sourcesa newsletter about the AI ​​race, and its colleagues accessa podcast about tech industry insiders. Earlier, he was the Deputy Editor at Verge.