Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The AI bubble argument misunderstands both bubbles and AI

danielmiessler.com

Post reply on HN
Print view View original

21–30 of 64 posts

Re: The AI bubble argument misunderstands both bubbles and AI

#21

Post by UncleOxidant »

TaupeRanger wrote: post #7
api wrote: post #6

It can be very useful and powerful and also be a bubble. See: dot-com bubble. It reminds me a lot of that.

Please read the article before commenting - your comment is literally what the article is addressing.

I read the article and it certainly doesn't address this well.

> The .com bubble was the belief that if you took your mid-ass business to the internet, you would instantly become rich. That is what popped.

And currently there's a belief in the market that if you just add AI to it it's going to the moon. I don't see how there's a difference here.

Re: The AI bubble argument misunderstands both bubbles and AI

#22

Post by ghc »

danielrm26 wrote: post #16
mergy wrote: post #5

I appreciate the author trying to address this. The only issue is the author didn't define what 'pops' in the bubble. The 'what' that pops, probably, IMHO, is the investment and resources ecosystem dumped, poured, thrown, redirected, etc. to AI. Just like the .com boom, the costs and money thrown at AI are outsized and will 'pop" as it matures. A 'pop" and leveling down to something perhaps not so outrageous is comin…

Hi, I tried to address that in the video version. I think what pops is the false belief. .com -> going online will save you AI -> adding a chatbot will save you To me, those are what qualify as bubbles. And the other stuff is just overheating, disruption, and other effects.

> I think what pops is the false belief.

Then you're inventing your own term. Bubble is shorthand for the Economics term "speculative bubble" or "economic bubble" and has described the behavior of many markets over the centuries. What collapses is asset prices, not ideas. It's definitional...just ask your friendly neighborhood economist.

Edit: Here, I went and found the origin for you (via wikipedia). The South Seas bubble spawned the term:

"The metaphor indicated that the prices of the stock were inflated and fragile – expanded based on nothing but air, and vulnerable to a sudden burst, as in fact occurred."

Re: The AI bubble argument misunderstands both bubbles and AI

#24

Post by Atlas667 »

harryf wrote: post #10

Better to talk about the Gartner Hype cycle and it's stages compare it to technologies that clearly followed that cycle such as; - Virtual Reality: big hype in the early 90s (arcades, movies like Lawnmower Man) through to use cases today like surgical training, aviation training - Mobile video calls: hyped in early 2000's with 3G and pre-iPhone devices. Actually took off with 4G and 5G plus iOS and Android phones - 3…

> Looking back at 2025 we'll be saying "Remember when they said everyone would lose their jobs to AI..."

Even if... one would think that a capitalist economy would do great with more and capable workers. One would think that more stuff would get done. Right?

I think there is a good chance that it will, in fact, shift millions towards unemployment. I am pro technology, yet technology in the hands of profit seekers will only be used to seek profits.

It happened during the agricultural revolution and during the industrial revolution. Millions of people were made unemployed by more efficient technology. Millions had to flee the country sides to then be thrown out of factories a few decades later, leading to slums and mass poverty. So many that the government had to enact more and more welfare programs like public schools, and food programs.

Capitalism is the only economic system that cannot handle more workers. For-profit production is not compatible with mass employment.

Almost like capitalism shoots itself in the foot and then forgets about it.

Re: The AI bubble argument misunderstands both bubbles and AI

#25

Post by CagedCoder »

Why should I trust someone that's making money from AI to tell me that AI isn't a bubble?

Especially when the entire argument seems to hinge on the author's dislike for the word Bubble. The bubble that pops isn't the actual thing, it's the money that was propping the thing up...

Re: The AI bubble argument misunderstands both bubbles and AI

#26

Post by qgin »

UncleOxidant wrote: post #18
catigula wrote: post #12

Earlier quoted context omitted.

That's a nice story but without any advancements proper leverage of currently existing AI models can indeed remove many, many jobs from the labor pool, probably double digit percentage-wise. The idea that these tools won't at all improve from where they are now isn't a widely held position.

Pareto principal. We've seen the 80% but that last 20% is going to be really tough (and expensive). GPT5 illustrates this - it wasn't really better than GPT4o and in some ways worse.

AI doesn't have to replace human jobs as they exist today 1:1.

In many situations, the work is not indivisible. If AI can handle 80% of the work, then a company can let AI handle that 80%, fire 80% of their people, and consolidate the remaining 20% still-human-work with whoever is left.

Re: The AI bubble argument misunderstands both bubbles and AI

#27

Post by audunw »

I don’t feel like this article addresses the question of whether we’re seeing an AI bubble or not at all.

To me this is very simple: certain companies have invested billions upon billions in AI data centres that need to see a very high return on investment in the years ahead to avoid a “pop”. I think nvidia is also being valued is if it’s a certainty that we will continue to build many such data centres every year for the foreseeable future.

These expectations are now being faced with the reality that AI isn’t making us that much more productive, and the improvements in LLMs are slowing down, so it’s not clear there will be a continued will to pay expensive subscription for these AIs, and certainly not clear that companies are willing to accept higher prices that may be need to get ROI.

There’s another way this could go down: I have a sneaking suspicion that we can get 90% of the productivity benefits of LLMs with models that can run locally. A combination of an algorithm breakthrough, better tuned models, better software tooling around them, and better hardware in the hands of end users, may get us to that 90%. That could end up making a lot of AI companies redundant.

Re: The AI bubble argument misunderstands both bubbles and AI

#28

Post by ath3nd »

1. The leading companies in LLMs: Anthropic and OpenAI are both not profitable and rely on huge amount of continuous investment (from "successes" like SoftBank who continuously invested in WeWork) to even stay afloat.

2. Each model from GPT3.5 to GPT 4 to 5 has been 10x more expensive to train. However, we have long ago entered the era of diminishing returns where 4 was a big improvement from 3.5 but 5 was a mediocre improvement (and to some, a regression) from the previous model. That suggests, unless a miracle occurs, 6 will be extremely expensive to train to imperceptible improvements.

3. The latest "features" from OpenAI:

- study mode https://openai.com/index/chatgpt-study-mode/

- the rumor for an office suite https://www.computerworld.com/article/4021949/openai-goes-fo...

show that they are running out of ideas what to do.

4. Anthropic is settling on huge cases: https://news.ycombinator.com/item?id=45142885 while struggling with usage vs monetization: https://news.ycombinator.com/item?id=44715471

5. Anthropic are very early in their journey to be already scraping the barrel, yet they recently 180 on their ToS and admit that they, in fact, will be training on your chats (suggesting that they can't get more/quality data elsewhere): https://www.anthropic.com/news/updates-to-our-consumer-terms.

6. OpenAI and Anthropic are both connected to CoreWeave, Nvidia, Microsoft, Google. What is funny is that CoreWeave is also connnected/dependent on Nvidia, and so is Microsoft and Google. Those companies' stocks are a major part of the US economy at the moment. https://www.reuters.com/business/dominant-ai-trade-confronts.... "Meanwhile, the combined market cap of the 10 biggest AI plays, including Nvidia, Broadcom and Microsoft -- stood at $18 trillion, BCA said in a note last week. That amounts to about 33% of S&P 500 stock market capitalization, up from around 15% in late 2022, according to BCA."

10 companies in the same sector, comprising 33% of the S&P capitalization is a 100% bubble, and if anything, one of the biggest ever to exist. And I, for one, can't wait for it to pop so I don't have to read hype booster articles like this on the front page of HackerNews.

Re: The AI bubble argument misunderstands both bubbles and AI

#29

Post by vannevar »

danielrm26 wrote: post #16
mergy wrote: post #5

I appreciate the author trying to address this. The only issue is the author didn't define what 'pops' in the bubble. The 'what' that pops, probably, IMHO, is the investment and resources ecosystem dumped, poured, thrown, redirected, etc. to AI. Just like the .com boom, the costs and money thrown at AI are outsized and will 'pop" as it matures. A 'pop" and leveling down to something perhaps not so outrageous is comin…

Hi, I tried to address that in the video version. I think what pops is the false belief. .com -> going online will save you AI -> adding a chatbot will save you To me, those are what qualify as bubbles. And the other stuff is just overheating, disruption, and other effects.

I think what pops is the Ponzi-like financial structure underlying the huge investments. The projected profits simply don't come fast enough to justify incremental investment, and the pyramid runs out of incoming money. Yes, AI is huge. But the Internet was also huge. And it still couldn't sustain the levels of investment that were being made in 1999 and 2000, even in the big players.

Re: The AI bubble argument misunderstands both bubbles and AI

#30

Post by ath3nd »

danielrm26 wrote: post #16
mergy wrote: post #5

I appreciate the author trying to address this. The only issue is the author didn't define what 'pops' in the bubble. The 'what' that pops, probably, IMHO, is the investment and resources ecosystem dumped, poured, thrown, redirected, etc. to AI. Just like the .com boom, the costs and money thrown at AI are outsized and will 'pop" as it matures. A 'pop" and leveling down to something perhaps not so outrageous is comin…

Hi, I tried to address that in the video version. I think what pops is the false belief. .com -> going online will save you AI -> adding a chatbot will save you To me, those are what qualify as bubbles. And the other stuff is just overheating, disruption, and other effects.

That's great that you have your own definitions of a bubble. However, we are generally talking of a financial/economic bubble, which is pretty clearly defined: https://en.wikipedia.org/wiki/Economic_bubble for quite some time.

One just need to ask one question: "is there a big amount of companies in a specific sector that are valued far above their returns". If that answer is yes, that means we are in a speculative bubble. The current insane valuations of unprofitable companies point to the largest speculative bubble ever to exist. I can't wait for it to pop faster already so there are less articles like this.

Post reply on HN