AI Bubble vs. Dot Com Crash. History Is Repeating

Honestly, I'd call that more of a wish than a prediction. Because most predictions specify which quarter something will burst. Saying that an industry structure will turn out a certain way is just stating the obvious, since everything eventually declines. Every new industry grows fast in the early days and then bursts. That's just wishful thinking.

Claims like 'it will collapse someday' are actually unfalsifiable. Predictions that specify a quarter, on the other hand, are not. This is exactly why I think so-called pundits are useless. They repeat unfalsifiable claims over and over, and when it finally happens later, they say 'I told you so.' How ridiculous is that? I can make that kind of claim too. 'The US will collapse.' Sure, it will. But who knows if it'll even exist in a thousand years? So honestly, if there's no timeframe, it's meaningless.

But most of what gets posted on HN is exactly this kind of unfalsifiable punditry. I'd rather write a new scenario. A scenario where AI succeeds, we're all classified as API tenant farmers, only a few influencers chosen by OpenAI and Anthropic survive, most programming companies shrink, and a new mega-tech emerges. That would be more fun to write.

we reached a point where there will always be demand for tokens.

suppose the current frontier models are final and there is no more progress. it still wouldn't matter because the cheaper the tokens the more demand there will be which will drive the silicon demand onward.

consider what you can do if a billion tokens cost cents: you could create a scaffold that would literally burn ungodly numbers of tokens on every conceivable angle. you could create scaffolds that don't just generate the next token but perform MCTS then at the end you keep the best results.

another way to look at it, we know that there is a document in the space of all possible documents which holds an answer to every conceivable solvable problem. but the combinatorics prohibit random exhaustive search. LLM's make exhaustive search somewhat more tractable, because there will probably exist a prompt/chain of thought which can yield it (especially when you can always get experts to poke it with cheap ideas).

creating silicon fabs is probably the most reliable investment at the moment, because there will always be room around the sun. orbital launch is probably less reliable because ocean floors still have a lot of room but it will depend on nuclear regulatory innovations. amusingly, had SpaceX actually gone up it would actually draw parallels to the dotcom bubble as being too soon.

note that tokens aren't just text anymore, MCP is very effective. if nothing else with billions of cheap tokens you will be able to exhaustively create endless virtual worlds with just Unreal Engine MCP - this is the absolute floor. entertainment without end.

and this all with just the current generation models frozen in time. but suppose only the intelligence is frozen, suppose training still works. if it's cheap enough you can always just dump compute on RL on the MCP directly. and the MCP can be something like silicon design...

    > How is this related to the post?

it argues that AI cannot be a bubble?

You are saying that AI is useful.

That doesn't mean there isn't a bubble. The internet is useful and we still had a dot com crash.

The main trend is that models are moving out of cloud to local setup to avoid paying for tokens. This becomes possible due to free open-source models like Kimi K3 that already reached level of the best commercial models.

The second trend is that AI is not mature enough to be used as a human replacement. Maybe as a helper, but even then they need close guidance and check. All these talks about autonomous agents, AI employees. etc - this is all hype that current level of AI technology cannot deliver. Realization of this fact will cause bubble deflation.