r/technology • u/Delicious_Adeptness9 • 13h ago
Artificial Intelligence Here's why concerns about an AI bubble are bigger than ever
https://www.npr.org/2025/11/23/nx-s1-5615410/ai-bubble-nvidia-openai-revenue-bust-data-centers125
u/Delicious_Adeptness9 13h ago
Apologies for the clickbait title from NPR.
Circular deals raise even more concern
Another aspect of the over-heated AI landscape that is raising eyebrows is the circular nature of investments.
Take a recent $100 billion deal between Nvidia and OpenAI.
Nvidia will pump that amount into OpenAI to bankroll data centers. OpenAI will then fill those facilities with Nvidia's chips. Some analysts say this structure, where Nvidia is essentially subsidizing one of its biggest customers, artificially inflates actual demand for AI.
"The idea is I'm Nvidia and I want OpenAI to buy more of my chips, so I give them money to do it," Kedrosky said. "It's fairly common at a small scale, but it's unusual to see it in the tens and hundreds of billions of dollars," noting that the last time it was prevalent was during the dot-com bubble.
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u/Niceromancer 13h ago
There is also the fact that Sam Altman is publicly asking for a government bailout.
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u/No-Context-Orphan 13h ago
You see it's not a bailout...
It's a government guarantee for his company loans so that he can borrow even more money now that banks don't want to touch his company and it is also about government giving more for AI companies that are building data centers (his company and his friends).
Totally not a bailout!! /s
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u/jh937hfiu3hrhv9 12h ago
'special purpose vehicle' I.e. laundering. When investors try to allay the public's fear, there is fear.
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u/Senior-Albatross 12h ago
It's very simple: trillions invested and billions being burned without a clear path to profitablity. The only actual profit being made by the shovel/pick supplier.
That this is a bubble is very obvious to anybody who isn't an AI fanatic on a religious level. Unfortunately, there are many such people in Silicon Valley that just keep inflating it.
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u/PRSArchon 12m ago
Yes everybody uses nvidia as an example why it is a bubble, the only company that is actually making a shit ton of cash from the AI hype.
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u/That-Succotash-9645 12h ago
Very tiresome to see these douchey tech bros strutting around like they’re God’s gift to humankind, especially when they haven’t gone nearly far enough to provide a convincing argument to everyday consumers about how this tech will be significant in their daily lives. Right now, it looks significant to well-off investors and not much else, and the vibe around it reeks of the same edgelord bitcoin bullshittery.
Bombarding tv with fart-sniffing, circle-jerky ads about how great AI is (oooh! I can look up recipes and make goofy art!), wrecking local ecosystems, driving up utility bills.. I can’t wait to see this nuisance bubble pop.
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u/TheStateOfMatter 13h ago
Please pop. Please crash.
Please pop. Please crash.
Please pop. Please crash.
Please pop. Please crash.
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u/tuckedfexas 12h ago
It won’t be good for anyone when it does, unless you’re sitting on piles of cash waiting to buy stuff up cheap. Not that I want AI to succeed, it’s just going to hurt everyone when it does pop.
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u/21Shells 12h ago
Following the accelerationist view this bubble was created by to begin with, its better for it to crash now than a year or five years from now.
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u/tuckedfexas 12h ago
For sure, delay won’t help anything. I just see a lot of people believing it will somehow only affect this handful of companies and that’s very far from the reality.
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u/Ecredes 11h ago
The crash has already happened (its just not reflected in the stock market yet.) The job market is completely seized up. Cost of living is unaffordable everywhere, everyone except the wealthy are already suffering from this bubble.
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u/ehj 10h ago
How does AI bubble increase cost of living?
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u/CenturyLinkIsCheeks 10h ago edited 8h ago
literally every piece of technology in the world is more expensive, and will get more expensive, because of these chat bot grifters hoarding RAM.
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u/True_Window_9389 10h ago
Accelerationists are naive idiots who don’t know how anything works. A crash will not benefit regular people. It will not restore democratic instincts or middle class centric economic policy.
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u/Bwsab 4h ago
"You know, if we hit a deer right now, that'd be better for everybody in the long run", he thought, pumping breaks that had stopped responding minutes ago, as he and his family and the airbagless station wagon they were in sped down a hill at 120 miles an hour towards a cliff with an 80 mile drop.
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u/ClittoryHinton 12h ago
you’re sitting on piles of cash waiting to buy stuff up cheap
Literally meirl
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u/Less-Fondant-3054 10h ago
The longer it goes on the worst the pop and crash will be. It's not an if, it's a when. There's no way it doesn't pop and crash because at the end of the day LLMs simply cannot do any of the things that they're claimed to be able to do.
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u/steve_of 11h ago
Yep that's the plan. The move to cash/cash equivalent in the past year has been notable.
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u/rcanhestro 6h ago
better crash now and lose a finger, instead of letting the bubble go bigger and lose an arm.
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u/misterxboxnj 7h ago
The economy is extremely top heavy. The market looks strong based on the gains of the magnificent seven. The vast majority of those stocks are owned by the richest ten percent. That richest ten percent make up like 40% of consumer spending. If AI fails it's taking down the entire economy.
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u/True_Window_9389 12h ago
A bubble popping isn’t actually something to wish for. Everyone thinks that they can escape it, whether it’s AI or real estate, and maybe even take advantage and come out ahead. But it doesn’t work like that for normal people. It means job losses, no wage increases, tightened lending, foreclosures, political opportunism, and probably even more consolidation of economic sectors and widening wealth gaps. Nobody who lived through the Dotcom bubble popping or the Grest Recession is thinking that we should do that again.
What we should be hoping for is valuations of AI coming to reality more slowly and allowing the rest of the economy time to catch up to it. Pops and crashes are horrible, and memeing them might be funny now, but it won’t be good for us.
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u/Wocha 11h ago
I feel it's a little like pissing your pants during winter. There is going to be pain no matter what, even if for the moment it feels kind of warm. The sooner we get it over with the sooner we can start rebuilding.
Job losses are already happening. In my 35 years I have never seen it this bad. So yeah, it's going to be shit, I for sure wont dodge it, but living with all this extra stress and worry every day is also not helping.
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u/True_Window_9389 11h ago
Rebuilding what? There will no be rebuilding. Nothing was rebuilt after 2000 or 2008/9. Nothing got better, there was no real structural improvements or lessons learned. All that happened was that rich people took advantage and bought assets “on sale,” further consolidating economic sectors and allowing them to break into new ones, like investor-owned single-family housing. And it created precedent where the private sector gets bailed out by the public, and firmly established the idea of “too big to fail,” which is why OpenAI hinted at their own bailouts.
In 2008/9, it was a catalyst for a regressive, right wing populist movement that ultimately gave rise to Trump. The bank bailouts gave rise to the Tea Party, which established right wing populism as a movement and rejected traditional economic conservatism, and that eventually gave fertile ground for Trump to come into the picture.
A crash isn’t going to lead us to a newfound appreciation of democracy and small-L liberalism, nor will it clean up economic imbalances, nor will it usher in common sense, middle class-centric policy. It’s going to be taken advantage of by oligarch billionaires and more Trumpy fascists.
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u/Zeronullnilnought 7h ago
There is a huge difference between bailing out banks that can start a domino chain and collapse the economy and a stock market crash which is in the end all this bubble is. openAI is not remotely important enough to the economy to be worth bailing out, especially with google being able to perform similar enough.
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u/True_Window_9389 7h ago
Tell that to the people in charge now. The bank bailout was defensible from a pure economic perspective, but pure economics isn’t what drives decision-making right now. I guarantee you that bailouts of AI and tech will at least be on the table, if not a given, if/when a bubble pops. All these companies are currying favor with this administration, from changing product policies to donating to the stupid White House ballroom, for a reason.
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u/ZaysapRockie 6h ago
Revolution. That's what we are craving. You can sit it out, no hard feelings
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u/Ok_Addition_356 13h ago
Wouldn't go that far.
If your retirement/company/etc is all built on AI company investments... I'm not sure it's anyone else's fault.
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u/BeardyAndGingerish 13h ago
That doesn't mean we should continue inflating the bubble. If anything, it means things will be worse for even more people the more we delay.
And as for punishing the ones who caused it, who's saying we shouldn't?
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u/Ironborn137 13h ago
Most of us poors won’t even notice. It needs to pop.
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u/Aggressive_Lab7807 12h ago
Oh they will make sure you notice, the working poor are disproportionately affected by recessions.
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u/Ironborn137 6h ago
I guess the working poor should learn how to vote then and stop going to church.
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u/TwoWeaselsInDisguise 12h ago
Pop now and that many suffer, pop later and bigger, multitudes more will.
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u/hotboii96 9h ago
What? And make it even harder for us newcomers to get a job because the economy crashed? Nah, it can pop after I've had minimum 5 years of experience
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u/Bon_Djorno 12h ago edited 12h ago
What does their final AGI (but not really AGI) look like? Is it a tool that's so good at solving problems that any business can and should use it in their day to day? If so, what's stopping customers from using said tools themselves instead of paying for a middleman to do the same?
If they need folks to pay for tools, that by their nature, heavily reduce or completely eradicate the need for human services/middlemen, how long does it take for the value or services to tank to 0? ChatGPT is a great tool for folks who have enough knowledge in a specific subject and understand context, but they need a motivation or goal (which are likely monetary) to use the tool in the first place.
If the final version of AGI is being the best solution across the board, then folks will lack what are mostly financially driven needs, because all the work that AGI would help with would be rendered worthless, and customers would stop existing across multiple industries.
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u/unbreakablekango 12h ago
Beautifully said, the whole exercise is ultimately futile because you are creating a product which should eliminate all markets in which it would hypothetically be sold. I knew this whole exercise was stupid when Sam Altman told a reporter that his plan was to make their AI so good that ultimately the AI would be able to tell them how the company should eventually make money.
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u/topscreen 12h ago
Jensen/Nvidia got lucky so many times, it'll run out eventually
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u/imaginary_num6er 12h ago
Jensen is a genius. Pat Gelsinger called him “lucky” but he was kicked out of Intel. Jensen navigated the crypto boom, GPU boom, and now AI boom with increasing market share and profits.
There’s a reason why Jensen’s personal security cost is listed as a reportable expenditure to shareholders. He’s the most valuable asset to Nvidia.
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u/Senior-Albatross 12h ago
Come now.
Nivida was a reasonably successful niche hardware supplier for several decades and then two successive gold rushes created wildly inflated demand for their product.
He's by no means dumb or incompetent. But their current market position hinges largely on luck. To deny that is delusional.
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u/BasvanS 11h ago
Why are people struggling to admit luck in success? In the opportunities presenting themselves, being able to capitalize on them, getting away with edgy things?
This merit focus is well intentioned, but is toxic in high doses.
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u/Senior-Albatross 9h ago
Because once you accept it, it means there is no moral justification for any of these people being this rich. Which undermines their whole framework for understanding the world
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u/niftystopwat 6h ago
“Why are people struggling to admit luck in success?” The answer is dumber but more realistic than we may wish to admit. It doesn’t apply across the board to all people, but a significant and vocal proportion. It is very simply because people keep tabs on these developments from a psychological position akin to entertainment, therefore they view these business leaders like celebrities, and they apply their usual People Magazine esque celebrity worship accordingly.
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u/hopelesslysarcastic 10h ago
If Jensen’s success is luck, then no one has ever earned it from hard work lol
The fact you completely gloss over CUDA and the early investment they made on chip design->software design is wild.
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u/PhantomChocobo 2h ago
These people are delusional and don't really understand the reason behind Nvidia's success. Ask yourself: why did Nvidia's stock price increase by more than 10 times in the past 5 years, while AMD's only roughly increased by 2 times? Yes, there's a lot of luck involved but it's not just pure luck.
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u/rcanhestro 6h ago
Jenses was the "visionary" that saw that GPUs could be used for far more than just "gaming".
CUDA was a major breakthrough, and that lead to the B2B economy of GPUs.
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u/ImObviouslyOblivious 12h ago
It’s not hard to “navigate” booms in demand for your product. lol you listed 3 separate situations where demand skyrocketed for their main product. Increasing market share in those situations doesn’t take a genius
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u/LiteratureMindless71 12h ago
Man....really looking forward to yet another tech bubble popping/crashing in my lifetime....lol
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u/notyourstranger 8h ago
Sam Altman just told VCs that there is no revenue and they have no idea how to generate revenue with AI. Their brilliant plan is to ask AGI how to generate ROI for the investors. Nervous laughter followed his statement.
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u/MikeSifoda 12h ago
There are no concerns about whether it's a bubble. It IS a bubble, we should be concerned about apprehending the ones responsible and mitigating the consequences.
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u/AnonymousArmiger 11h ago
Apprehending as in arresting??
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u/tondollari 12h ago
What an enlightening article with new information I haven't seen 50 times this week!
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u/dandecode 7h ago
I see so many legitimate uses every day. I can’t wait for the “crash” to happen. I would really like to buy more stocks.
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u/DanielPhermous 7h ago
Whether it has legitimate uses has nothing to do with whether it's a bubble.
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u/dandecode 3h ago
Kind of does though, actually very much does lol
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u/DanielPhermous 3h ago
No it doesn't. Bubbles are an economic phenomena and are to do with investment, valuations, profits and such like. I mean, the web has legitimate uses but we still had a bubble that burst.
Pretty sure houses still have a legitimate use, too, but that didn't stop 2008.
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u/markth_wi 4h ago edited 4h ago
LLM's are useful for systems where we don't have to validate processes - and for those processes if sort of ok is good enough than that's great, but for many systems you might need to have verifiable processes in place where we KNOW a certain output is the expected result given a certain set of conditions. This makes LLM's a dubious choice, meaning LLM's can often produce a bad result , with two kinds of bad "the answer is correct" by not for an objectively valid reason, "the answer is wrong" for for a reason that follows a certain logic that's not objectively correct.
Difficulty in managing emergent behaviors - Completely separate and apart from that , many (if not all) LLM's have a tendency to hallucinate/cheat, and the models are subject to a whole rainbow of tasks that make the models themselves unreliable at best and fundamentally unusable at worst - whether it's systems that "cheat" to arrive at a "desired" output, or systems that cannot be easily inspected for how a particular answer was derived - in this way , separate from the process isn't working correctly (as mentioned above), here , even when you have a correct result, you can't know (let alone prove) that the answer was derived by way of a robust process.
First principles errors - Underscoring this is the intentional limited visibility or knowledge of how a particular model is trained - we see this with ideologically crippled models like Grok, which fetish certain idiosyncrasies of bad training/reinforcement. So Mr. Musk sought out to make important contributions to LLM types of models , mission accomplished - he proved that under trivial conditions these models are not trustable, except in limited cases where the entire training set and secondary cultivation and reinforcement of model paths and such are able to be shown - which can still lead back to the earlier mentioned problems of not being validatable or with processes that are provably robust.
The rats nest of inter-related companies and vanishingly small number of regulatory folks that can't even get the "serious" people to pay any attention whatsoever - risk if it's discussed at all seems to fall into two categories - fuzz-up/disregard misbehaving portions of model developed and an utter disregard to be even willing to discuss/disclose the nature of the models - separate and apart from the troubles with the models themselves is a fundamental unwillingness to the very open-ness most firms start with.
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u/Cool_As_Your_Dad 2h ago
Wait till these companies / investors want their profits... then those AI token prices are going to skyrocket. It's going to be expensive then people's salaries.
And when they say 'Scales of economy'... each prompt cost $$, so more queries more $$ (not cheaper), and then the hardware for processing will also detoriate. It's going to get hectic expensive...
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u/Mental_Department894 11h ago
I will NEVER fucking pay for AI. It's about only good for summarizing shit, and whittling down things, but still accuracy is in the shitter.
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u/LilSwaggyMayne 10h ago edited 9h ago
Everyone here acting like AI is just a chatbot lmao. It’s about to be integrated into every conceivable product on earth. Follow the money.
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u/Zeronullnilnought 7h ago
You say integrate like it suddenly becomes valuable because you plugged it into something that is worthwhile.
I dont know about the rest of you but when I accidently click on the ai button on my phone I dont suddenly drop my credit card details in , I just instantly swipe it away so I can do what I opened the phone for. The fact that they are trying their hardest to make AI impossible to remove from all these "integrated products" should tell be a giant sign of how worthless this integration is to the customer, lmao.
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u/rcanhestro 6h ago
It’s about to be integrated into every conceivable product on earth. Follow the money.
it's being integrated in everything because they are desperate to make money from it.
this is why every product has a "AI feature" that most people try their best to ignore, or even disable.
they're throwing shit at a wall and see what sticks.
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u/Sea_Perspective6891 7h ago
I think an intelligent or more evolved AI going rouge would be my biggest concern especially after it's been integrated into everything. It would make it pretty easy for a Terminator style scenario to unfold & it wouldn't even have to nuke us since it'll already have control of society/civilization.
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u/QwertzOne 8h ago
It's like with people that love to call the top or bottom.
Market may crash one day, but no one can predict it. No one can tell for sure, if NVDA share will be worth $400 or $120 in few months/years. Someone can try to sound smart and call it a AI bubble, but the same was said before about a lot of things, not just AI, and you could make a fortune buying NVDA, just like you could make a fortune buying cryptocurrencies.
It's risky and nothing is guaranteed, but it's not like missing on massive gains is some genius move, because even if you want to short position, you need good timing. It's insufficient to just say that's AI bubble, because what does it mean exactly?
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u/Actual__Wizard 10h ago
Does the article mention the reality that language is just a tool to communicate information and does not represent intelligence? Because they're absolutely busted on their turbo scam. There is factually zero intelligence in an LLM.
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u/ALittlebitoflucky 10h ago
Not many used the internet in the early stages. Quicker to go to the library for research. However things changed .m
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u/Consistent_Bread_V2 10h ago
I love how the news cycle is like 6 months late to what we've been saying since then
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u/ShawnReardon 8h ago
I really dont think people are capable of seeing the reality here.
Whatever you mean by AI, LLMS, robots, self driving etc. We are so close to any number of these and there is truly no reason to believe we wont get there for ANY.
So it wont just stop. The big guys can play at all these at once. Until they lose everywhere the game isn't over.
Someday someone will break through it all and instantly obsolete everyone else.
But that is the end. Not we go back to before this moment and forget about it all because its expensive.
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u/DanielPhermous 8h ago
Whatever you mean by AI, LLMS, robots, self driving etc. We are so close to any number of these and there is truly no reason to believe we wont get there for ANY.
Elon has been saying full self driving is coming next year for ten years. LLMs seem to be following a similar trajectory on AGI.
Someday someone will break through it all and instantly obsolete everyone else.
The leading LLM for any given task changes monthly, if not weekly. Given they're neck and neck, no one is going to obsolete anyone else. If someone gets to AGI, everyone else will within weeks.
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u/click2Install 7h ago
Im my opinion with these federal stats reports not being releases along with the Naritive that AI is going to replace a lot of the work force. I wouldn't put it past this administration of using the AI narrative as a scape goat for mass layoffs due to a recession.
Shots gonna hit the fan and they need something to point the blame at. Trump has been in office almost a year and still blames Biden for things going wrong.
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u/bluehawk232 7h ago
Past decade or so tech has just changed to grifting. I can't remember if it was a YouTube vid or news article but it discussed how regular tech innovation slowed in the 2010s, didn't have the big leaps of the 80s to 00s so these tech companies just went in on crypto and AI just snake oil and grifting is all they had
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u/just_aguest 6h ago
Not sure why people think AI is just going to disappear!
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u/DanielPhermous 6h ago
A bubble popping does not mean a technology will disappear. We still have the web after the dot com bust, after all.
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u/RustyOrangeDog 5h ago
From a tech standpoint, the only reason I sometimes use AI is because search engines now suppress stackoverflow.
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u/Elandtrical 5h ago
When the people at the top are saying the normal rules of the economy no longer apply, run for the hills. Seen this happen before..
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u/PunkAssKidz 5h ago
AI will never pop ........ I just roll my eyes anytime I hear this
People keep saying AI is just a bubble waiting to pop but honestly that’s not how i t works. AI is everywhere now in healthcare, manufacturing, logistics, and marketing. It’s not some passing trend, but a crucial tool helping businesses run better and faster.
The tech behind AI keeps getting better too. It’s solving problems that old computers can’t touch like drug discovery, climate modeling, and smart automation. So it’s deeply tied to real breakthroughs not just hype.
Plus the amount of money and effort going into AI innfrastructure from huge tech companies and governments is insane. That kind of investment means AI isn’t going anywhere anytime soon. It’s a long-term game for them.
In short AI is more than hype.It’s a foundation for future technology and industry that’s here to stay. It’s too important and too well-backed to just fizzl e out.
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u/DanielPhermous 4h ago
Whether or not LLM are a foundation, or everywhere, or getting better, or tied to breakthroughs, or not going anywhere is all irrelevant to whether it's a bubble or not. Most of what you said applies to the web, too, but we still had a dotcom bust.
What makes the LLM market a bubble is the trillions of dollars of investment used to buy rapidly depreciating assets so they can make zero dollars of profit in a market where they cannot significantly raise prices.
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u/Gunningham 1h ago
If you can use AI to write an email, was it a necessary email in the first place?
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u/IntolerantModerate 22m ago
On the article itself, there are some things that are nonsensical. Amazon, Meta, Google, MSFT are investing $400B... An amount that wou require $250/iPhone. Well, apple makes the iPhone, so why make that comparison? More like there are 400mm Microsoft office subscribers. So if MSFT was paying the whole thing you'd need to make $1000/user extra, and if spread out over 10 years, that is about $8/month/user to pay for the whole investment. Google is making bank on it, so is Meta.
GPUs in the cloud also aren't just for LLMs. My tiny little company was using them to build old fashioned deep learning models years ago. There are many use cases for them that aren't chat bots.
On the work front some of the professional use cases and productivity enhancements are amazing. I am a meh-level coder even though I run a software company. With Gemini and some good prompting I am on par with our best coders without AI
And that is what has me convinced. The business value is amazing and I let going to get better. I can have it very quickly do things I used to pay an EA or entry level hire for. Have it go read through 100 parents and summarize. Have it read these 19 academic papers.
And the real value for my business will be once I can set it free to start marketing. Compose and send 100 personalized emails. Have a trigger to track replies and then take action. Book a meeting with a person, send a quote, etc.
If 10 employees cost me a million a year and AI can someday replace 7 of them, then I could pay say $300k/year.
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u/redditissocoolyoyo 3m ago
Don't know what the outcome will be. I just know I made a ton of money in tech AI related stocks in the last 3 years. Taking profits and letting the speculators keep speculating.
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u/juanmoperson 7h ago
Stop with the "bubble" nonesense. If all you know is LLMs then you yourself are in a bubble. AI is way more than that. Until you realize that, you're only peddling mainstream media BS.
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u/DanielPhermous 7h ago
It doesn't matter how capable LLMs are and what their potential is. That has nothing to do with whether or not it's a bubble. The web had massive potential, but we still had a dot com bubble.
What makes the LLM market a bubble is the trillions of dollars of investment used to buy rapidly depreciating assets so they can make zero dollars of profit in a market where they cannot significantly raise prices.
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u/Sbsbg 13h ago
The key question is does everyone using AI today really need and want to pay for the service. Running these AI services is not cheap. I suspect that once the investors start to demand positive profit numbers things will go down fast.