I am split on this, this is definitely a bubble but I don’t know if it’s going to crash or wipe out countries. The problem here is the tech is real and has great promise. This is not AGI but llms can make the promise of robots real, by it may take a long time for it to materialize just like with self driving cars. So the hype can subside but it needs an impetus to slide. It may or may not happen and even if it does, not sure when
I think this is a very large overstatement. Many large problems still exist in robotics which can not be papered over with LLMs. I’m familiar with problems in manipulation and affordable sensing, which will not be solved via llms, and are fundamentally necessary for reliable and safe interaction with the real world. I’m confident there are many others. LLMs probably will help with high level planning. But that’s a subset of the many problems that keep robots from becoming mass market products.
I think people are excited about robotics because of the many demo videos that have been coming out of various companies. However, almost all of these videos are smoke and mirrors. If you ask somebody who works on those demos, they will unashamedly tell you all the ways they worked around their technical limitations to get just the right footage. The PR departments are less upfront with that info.
The impetus is that 90% of our country is in recession and the rest are soon to follow. Delinquencies are rising fast and not just in subprime. Layoffs are at levels not seen since 2008. Crypto, tech stocks and many housing markets have already peaked or are already in bear markets. The crash is here and it's inevitably going to get worse.
This was very true of the dotcom bubble. The entire "web" was new, and the promise was everything you use it for today.
Pets.com was a laughing stock for years as an example of dotcom excess, and now we have chewy.com, successfully running the same model.
Webvan.com, was a similar example of "excess" and now we have Instacart and others.
I looked up webvan just now--the postmortem seems relevant:
"Webvan failed due to a combination of overspending on infrastructure, rapid and unproven expansion, and an unsustainable business model that prioritized growth over profitability."
The problem of dotcom is we needed a cultural shift. I had my first internet date during the dot com bubble and I remember we would lie to people about how we met because the idea sounded so insane at the time to basically everyone.
In 1999 it seemed kind of crazy to even use your real name online let alone put your credit card into the web browser.
Put your credit card into the internet browser then a stranger brings you items in their van? Completely insane culturally in 1999. It would have sounded like the start of an Unsolved Mysteries episode to the average person in 1999. There was no market for that in 1999.
The lesson I take from dotcom is we had this massive bubble and burst over technology that already existed, worked flawlessly and largely just needed time for the culture to adapt to it.
The main difference this time is we are pricing in technology that doesn't actually exist.
I can't think of another bubble that was based on something that doesn't exist. The closest analogy I can think of is the railroad bubble but with the trains not actually existing outside of some vague theoretical idea that we don't actually know how to build. A bubble in laying down rail because of how big it will be when we figure out how to build the trains.
The only way you would get a bubble that stupid would be to have 50-100 years of art, stories and movies priming the entire population on the inevitability of the train.
I don't get it. Nobody blinked twice about getting into a car with a total stranger before Uber either — taxis have been around for well over a hundred years. It's not exactly a huge cultural change, just more efficient and convenient.
I understand training is still costly, but it's not unimaginable for it to turn profitable as well if you think believe they'll generate trillions in value by eliminating millions of jobs.
If you eliminate ONE job and let's say the job pays $100K, in theory at most $100K goes instead to AI revenue. In practice it's a lot less, nobody is going to move everything to AI if it's just a 10% saving.
So, to get a trillion in value, you'd have to eliminate many tens or even hundreds of millions of jobs.
I don't believe this has been the case or claim at all. At best they have recognized some limited use cases in certain models where API tokens have generated a gross profit.
Some have realized that LLMs don’t really reason and that LLMs may not be as amazing as the claims. However, I think LLMs plus agents, plus advances that are likely to come may very well prove to be more valuable than anyone can foresee. It’s very difficult to predict the future profitability of tech.
I have been spent many hours with them on coding tasks. As things currently stand once context or complexity reaches a certain point they become completely incapable of solving problems and that point occurs on very simple things. They appear completely brain dead at times although they are magnificent liars at making you think they understand the problem. Although, I recently got chatGPT 5 to solve a problem in a couple hours that Claude Sonnet 4 was simply never going to solve. So they are improving. I don’t know the limits. I’m more hopeful that a feedback loop with specialized agents will take things much further. I’m extremely skeptical that getting bigger context windows and larger models is going to get us reasoning. The skepticism comes from observations. Clearly no one knows how thinking actually works.
I don’t know how to address the evolve part. LLMs don’t directly mutate and have selective pressure like living organisms. Maybe a simulation could be made to do that.
Gotham Chess has done chat bot chess championships. The chat bots make a few good moves, and then begin making illegal moves, randomly removing or adding pieces, and completing ignoring obvious threats and attacks. It is so obvious that the pattern matching is not resulting in reasoning. Another example is Towers of Hanoi. An LLM can write code to solve it, because that’s an easy pattern match. But it can’t write out the steps beyond a 3 disk puzzle. It has no understanding of the recursive nature of the problem.
I think it’s completely uncontroversial that younger humans are incapable of reasoning, no? The only area for discussion is at which age (if any) this changes for an individual.
I would say that's a pretty controversial take unless you strictly mean babies. At the point a kid can walk they are certainly capable of some level of reasoning because just walking successfully prior to it becoming muscle memory requires a fair amount of reasoning and children very rapidly figure out new things both spatial and logical.
There's a lot of manipulation going on. Attempts to pop the bubble artificially, prematurely. There's a lot of impatience and illusion of control out there. You can bet that when a real bubble bursts, we won't be seeing articles about it on Wired in the run up.
You're in the disbelief phase, it sounds like you are overinvested and defensive about your position. The Nasdaq and crypto already peaked, housing is peaking as well, we're in the middle of the crash.
Is this the same crash that happened when tariffs were announced? What about the 2022 crash? What sort of crash are we talking about?
IMO the AI incumbents want to provoke smaller pullbacks on the way up to A) kill competitors who can't handle it and B) prevent a catastrophic crash that would actually hurt them.
That's why we see stuff like Thiel selling his NVDA holdings. He's just going to buy back in later.
If it’s a bubble because some large and small companies will collapse, then yes, there is a bubble waiting to burst.
OpenAI, NVIDIA, Microsoft, Apple, Amazon, etc. obviously won’t collapse.
The money being thrown around is mind boggling. However, we’ve been throwing this type of money around for a handful of years now.
Tons of layoffs, homelessness, corruption, unemployment, difficulties for everyone to find a job, the incoming SNAP meltdown, government shutdown and the mess it’s going to cause for a while. None of it makes sense. It’s pure crazy because everything should have imploded by now. The tech layoffs and government layoffs alone should be causing a shitstorm of misery out there, but it’s hidden somehow.
AI isn’t going away. It’s here to stay. It has already become embedded into so many core things we do everyday. So many jobs are affected by it. Like, marketing, graphic design, writing, so many jobs in hollywood, like storyboarding and voiceover work, and the creative process of so many things. So many scenes today in movies are CGI and it’s hard to tell, like 3-second scenes, or CGI overlays. All of that will be created with a prompt in the next couple of years. Sure, some editing will be needed for the generated scenes, but with far less staff. The key takeaway here is that this equates to millions of jobs vanishing rather quickly. Core jobs that people of all ages based their careers on.
Don’t get lost in the details of AI generating garbage or not. The remaining companies that survive will continue to make it better. Don’t think for a second there will be a resurgence in these jobs coming back because everyone thinks a human can do it better.
All those data center GPU buildouts will not go waste. We’re headed for a dystopia that’s even worse than the one we’re living in right now.
Wait until a few people are killed by police for stealing food from a grocery story because they are starving and need to feed their families. It will be the first time we get close to a civil war becoming a reality.
Its amazing what the invention of the transformer architecture has achieved; even if the above doesn't come to the past it has sparked discussion of the above possibilities. For a simple idea/algorithm to have changed the world or at least people's future outlook to bleak dystopia; to create mass stock valuations, to justify the business layoffs that have happened and more is definitely significant and much more than I would of imagined just a few years ago.
I'm amazed at the sheer volume of resources allocated to the above so quickly for example; more than any other boom I've seen. Society can raise trillions quickly if it means not employing people I guess? Knowing basic economics I don't buy the utopia case with AI for the majority of people, particularly the middle class. To be clear most people I meet anecdotally (especially outside the tech space) are net negative on the changes AI is doing to their lives, even if they are in jobs like trades.
It has had a profound impact; probably much more (no matter which camp wins the argument, bulls or bears on AI) than its inventors ever thought it would. It makes me think of whether the people who invented this, once they see the end result, will be happy with their invention and the changes it will create in the world. If they aren't happy in hindsight it says something about the unfortunately all too common naivete of the techie in general and the impact of their work on society/economics/etc until it does eventually occur.
During most of the dot-com boom, there was not a broad consensus that a bubble existed, whereas today’s AI boom is widely accompanied by media warnings about an AI bubble, making public awareness much higher than it was in the late 1990s. I don't think a single person hasn't heard the "circular financing" talking points from multiple people who think they're being insightful. Or Burry who thinks a GPU should be trashed after 2 years. Doesn't sound like irrational euphoria.
There is better awareness of everything bc of the internet, you are just in the disbelief phase even though markets have already peaked and insiders are heading for the exits.
This time, "AI" has been hyped up more than tech in 1999 by the media. The media has just reversed course in 2025 because they found out that most people hate "AI". in 2023-2024 it was mainly hype.
The thing that got me most about Federal Reserve Chairman Greenspan's warning about "irrational exuberance" of the markets was that the warning was in 1996, and it seemed to me and many others already obvious by then, and that Greenspan was cautious and late in his warning.
Yet, the markets continued rapidly upward for another FOUR years. Shorting the high-flying stocks with negligible income in 1997 or 1998 would have been completely sensible. And it would have wiped you out, as you would have been years too early.
It just proves the adage: "The markets can remain irrational longer than you can remain solvent."
Today, the levels of (over-)investment compared to investment are even more extreme. But when is the time to call it?
Its silly to talk about a bubble when all of the major AI companies just recieved 3-5yrs runway in VC. I normally hate the term FUD, bit in this case it's proveably true. Even if these companies collapse in 5 years, thats a lifetime away in tech years, not an immediate bubble.
I don't think it's particularly silly when the rest of the economy is by all indications in a deep recession. If the tech market is literally the only thing holding up the market then you have to ask how and why.
S&P500 isn’t “the economy” but in the context of talk of a bubble it seems like we’re talking about equities not the whole economy. So let’s just keep taking the short cut …
The top is over performing so concentration is real but it’s not the only growth driver:
True or not true hard to say without better definitions of terms but seems like current profile is not ultra common in history but it’s not a bunch of losers getting diluted out.
We're at a record number of subprime borrowers falling behind on car loans, which historically is a really bad economical sign, consumer sentiment is at an all time low and the labor market isn't looking great either. Anecdotally, prices have risen sharply and people are getting sharply priced out of basic necessities due to rising costs.
The subprime loan data can be seen here [1] and consumer sentiment here [2]. Job losses are much harder to estimate given that the current admin is actively refusing to post job numbers (for perhaps, obvious reasons) but we've seen other sites estimate that we're seeing record layoffs [3]. And that's before we get into stuff like tariff policy or the hidden costs of throwing a lot of government employees into unemployment.
I am split on this, this is definitely a bubble but I don’t know if it’s going to crash or wipe out countries. The problem here is the tech is real and has great promise. This is not AGI but llms can make the promise of robots real, by it may take a long time for it to materialize just like with self driving cars. So the hype can subside but it needs an impetus to slide. It may or may not happen and even if it does, not sure when
> llms can make the promise of robots real
I think this is a very large overstatement. Many large problems still exist in robotics which can not be papered over with LLMs. I’m familiar with problems in manipulation and affordable sensing, which will not be solved via llms, and are fundamentally necessary for reliable and safe interaction with the real world. I’m confident there are many others. LLMs probably will help with high level planning. But that’s a subset of the many problems that keep robots from becoming mass market products.
I think people are excited about robotics because of the many demo videos that have been coming out of various companies. However, almost all of these videos are smoke and mirrors. If you ask somebody who works on those demos, they will unashamedly tell you all the ways they worked around their technical limitations to get just the right footage. The PR departments are less upfront with that info.
The impetus is that 90% of our country is in recession and the rest are soon to follow. Delinquencies are rising fast and not just in subprime. Layoffs are at levels not seen since 2008. Crypto, tech stocks and many housing markets have already peaked or are already in bear markets. The crash is here and it's inevitably going to get worse.
I’m not seeing delinquency increases or values close to .com or ‘08 on this (https://fred.stlouisfed.org/series/DRALACBN) or more specific series
all true - but none of this is actually “ai bubble”
Betting on "growth powered by AI" is the only thing keeping valuations up at this point..
> the tech is real and has great promise.
This was very true of the dotcom bubble. The entire "web" was new, and the promise was everything you use it for today.
Pets.com was a laughing stock for years as an example of dotcom excess, and now we have chewy.com, successfully running the same model.
Webvan.com, was a similar example of "excess" and now we have Instacart and others.
I looked up webvan just now--the postmortem seems relevant:
"Webvan failed due to a combination of overspending on infrastructure, rapid and unproven expansion, and an unsustainable business model that prioritized growth over profitability."
This to me is the whole bubble.
The problem of dotcom is we needed a cultural shift. I had my first internet date during the dot com bubble and I remember we would lie to people about how we met because the idea sounded so insane at the time to basically everyone. In 1999 it seemed kind of crazy to even use your real name online let alone put your credit card into the web browser.
Put your credit card into the internet browser then a stranger brings you items in their van? Completely insane culturally in 1999. It would have sounded like the start of an Unsolved Mysteries episode to the average person in 1999. There was no market for that in 1999.
The lesson I take from dotcom is we had this massive bubble and burst over technology that already existed, worked flawlessly and largely just needed time for the culture to adapt to it.
The main difference this time is we are pricing in technology that doesn't actually exist.
I can't think of another bubble that was based on something that doesn't exist. The closest analogy I can think of is the railroad bubble but with the trains not actually existing outside of some vague theoretical idea that we don't actually know how to build. A bubble in laying down rail because of how big it will be when we figure out how to build the trains.
The only way you would get a bubble that stupid would be to have 50-100 years of art, stories and movies priming the entire population on the inevitability of the train.
Uber might be the wildest cultural shift of the last 25 years.
Nobody blinks twice nowadays at getting into a car with a total stranger.
I don't get it. Nobody blinked twice about getting into a car with a total stranger before Uber either — taxis have been around for well over a hundred years. It's not exactly a huge cultural change, just more efficient and convenient.
Isn't openAI already profitable on inference?
I understand training is still costly, but it's not unimaginable for it to turn profitable as well if you think believe they'll generate trillions in value by eliminating millions of jobs.
If you eliminate ONE job and let's say the job pays $100K, in theory at most $100K goes instead to AI revenue. In practice it's a lot less, nobody is going to move everything to AI if it's just a 10% saving.
So, to get a trillion in value, you'd have to eliminate many tens or even hundreds of millions of jobs.
>Isn't openAI already profitable on inference?
I don't believe this has been the case or claim at all. At best they have recognized some limited use cases in certain models where API tokens have generated a gross profit.
No, inference is actually pointing to them being economically unviable.
https://www.ft.com/content/fce77ba4-6231-4920-9e99-693a6c38e...
Some have realized that LLMs don’t really reason and that LLMs may not be as amazing as the claims. However, I think LLMs plus agents, plus advances that are likely to come may very well prove to be more valuable than anyone can foresee. It’s very difficult to predict the future profitability of tech.
> LLMs don’t really reason
Do you have a test for this?
Or is it based on the presumption that reasoning skills cannot evolve, it can only be the result of "intelligent design"?
I have been spent many hours with them on coding tasks. As things currently stand once context or complexity reaches a certain point they become completely incapable of solving problems and that point occurs on very simple things. They appear completely brain dead at times although they are magnificent liars at making you think they understand the problem. Although, I recently got chatGPT 5 to solve a problem in a couple hours that Claude Sonnet 4 was simply never going to solve. So they are improving. I don’t know the limits. I’m more hopeful that a feedback loop with specialized agents will take things much further. I’m extremely skeptical that getting bigger context windows and larger models is going to get us reasoning. The skepticism comes from observations. Clearly no one knows how thinking actually works. I don’t know how to address the evolve part. LLMs don’t directly mutate and have selective pressure like living organisms. Maybe a simulation could be made to do that.
Gotham Chess has done chat bot chess championships. The chat bots make a few good moves, and then begin making illegal moves, randomly removing or adding pieces, and completing ignoring obvious threats and attacks. It is so obvious that the pattern matching is not resulting in reasoning. Another example is Towers of Hanoi. An LLM can write code to solve it, because that’s an easy pattern match. But it can’t write out the steps beyond a 3 disk puzzle. It has no understanding of the recursive nature of the problem.
Would you agree that many humans, especially younger ones, are also incapable of reasoning?
I think it’s completely uncontroversial that younger humans are incapable of reasoning, no? The only area for discussion is at which age (if any) this changes for an individual.
I would say that's a pretty controversial take unless you strictly mean babies. At the point a kid can walk they are certainly capable of some level of reasoning because just walking successfully prior to it becoming muscle memory requires a fair amount of reasoning and children very rapidly figure out new things both spatial and logical.
So if you believe babies do not reason, and walking humans do, then younger humans up to some age do not reason, yes?
Can you post your experiments please?
I don’t have a log of work that I can post.
https://archive.ph/DbFXY
There's a lot of manipulation going on. Attempts to pop the bubble artificially, prematurely. There's a lot of impatience and illusion of control out there. You can bet that when a real bubble bursts, we won't be seeing articles about it on Wired in the run up.
https://www.theguardian.com/business/2007/sep/30/5
You're in the disbelief phase, it sounds like you are overinvested and defensive about your position. The Nasdaq and crypto already peaked, housing is peaking as well, we're in the middle of the crash.
If we're already in the middle, this will be a soft landing indeed
Nope.
Is this the same crash that happened when tariffs were announced? What about the 2022 crash? What sort of crash are we talking about?
IMO the AI incumbents want to provoke smaller pullbacks on the way up to A) kill competitors who can't handle it and B) prevent a catastrophic crash that would actually hurt them.
That's why we see stuff like Thiel selling his NVDA holdings. He's just going to buy back in later.
If it’s a bubble because some large and small companies will collapse, then yes, there is a bubble waiting to burst.
OpenAI, NVIDIA, Microsoft, Apple, Amazon, etc. obviously won’t collapse.
The money being thrown around is mind boggling. However, we’ve been throwing this type of money around for a handful of years now.
Tons of layoffs, homelessness, corruption, unemployment, difficulties for everyone to find a job, the incoming SNAP meltdown, government shutdown and the mess it’s going to cause for a while. None of it makes sense. It’s pure crazy because everything should have imploded by now. The tech layoffs and government layoffs alone should be causing a shitstorm of misery out there, but it’s hidden somehow.
AI isn’t going away. It’s here to stay. It has already become embedded into so many core things we do everyday. So many jobs are affected by it. Like, marketing, graphic design, writing, so many jobs in hollywood, like storyboarding and voiceover work, and the creative process of so many things. So many scenes today in movies are CGI and it’s hard to tell, like 3-second scenes, or CGI overlays. All of that will be created with a prompt in the next couple of years. Sure, some editing will be needed for the generated scenes, but with far less staff. The key takeaway here is that this equates to millions of jobs vanishing rather quickly. Core jobs that people of all ages based their careers on.
Don’t get lost in the details of AI generating garbage or not. The remaining companies that survive will continue to make it better. Don’t think for a second there will be a resurgence in these jobs coming back because everyone thinks a human can do it better.
All those data center GPU buildouts will not go waste. We’re headed for a dystopia that’s even worse than the one we’re living in right now.
Wait until a few people are killed by police for stealing food from a grocery story because they are starving and need to feed their families. It will be the first time we get close to a civil war becoming a reality.
Its amazing what the invention of the transformer architecture has achieved; even if the above doesn't come to the past it has sparked discussion of the above possibilities. For a simple idea/algorithm to have changed the world or at least people's future outlook to bleak dystopia; to create mass stock valuations, to justify the business layoffs that have happened and more is definitely significant and much more than I would of imagined just a few years ago.
I'm amazed at the sheer volume of resources allocated to the above so quickly for example; more than any other boom I've seen. Society can raise trillions quickly if it means not employing people I guess? Knowing basic economics I don't buy the utopia case with AI for the majority of people, particularly the middle class. To be clear most people I meet anecdotally (especially outside the tech space) are net negative on the changes AI is doing to their lives, even if they are in jobs like trades.
It has had a profound impact; probably much more (no matter which camp wins the argument, bulls or bears on AI) than its inventors ever thought it would. It makes me think of whether the people who invented this, once they see the end result, will be happy with their invention and the changes it will create in the world. If they aren't happy in hindsight it says something about the unfortunately all too common naivete of the techie in general and the impact of their work on society/economics/etc until it does eventually occur.
During most of the dot-com boom, there was not a broad consensus that a bubble existed, whereas today’s AI boom is widely accompanied by media warnings about an AI bubble, making public awareness much higher than it was in the late 1990s. I don't think a single person hasn't heard the "circular financing" talking points from multiple people who think they're being insightful. Or Burry who thinks a GPU should be trashed after 2 years. Doesn't sound like irrational euphoria.
There is better awareness of everything bc of the internet, you are just in the disbelief phase even though markets have already peaked and insiders are heading for the exits.
The general term bubble doesn’t help.
It’s reasonably obvious that there are some very high expectations baked in to certain equity valuations.
Leave it to the reader to take a view on whether it makes sense.
Greenspan warned about irrational exuberance, the newspapers were full of articles like the Guardian one:
https://www.stlouisfed.org/publications/regional-economist/a...
https://www.theguardian.com/business/1999/dec/20/nasdaq.efin...
This time, "AI" has been hyped up more than tech in 1999 by the media. The media has just reversed course in 2025 because they found out that most people hate "AI". in 2023-2024 it was mainly hype.
This line from The Guardian article:
"The notion that Amazon.com will be allowed to corner the market in on-line book sales is wholly implausible."
The thing that got me most about Federal Reserve Chairman Greenspan's warning about "irrational exuberance" of the markets was that the warning was in 1996, and it seemed to me and many others already obvious by then, and that Greenspan was cautious and late in his warning.
Yet, the markets continued rapidly upward for another FOUR years. Shorting the high-flying stocks with negligible income in 1997 or 1998 would have been completely sensible. And it would have wiped you out, as you would have been years too early.
It just proves the adage: "The markets can remain irrational longer than you can remain solvent."
Today, the levels of (over-)investment compared to investment are even more extreme. But when is the time to call it?
Doesn’t that make it more irrational?
Peter Thiel dumped his shares, now the billionaires are pumping out the FUD.
[dead]
Its silly to talk about a bubble when all of the major AI companies just recieved 3-5yrs runway in VC. I normally hate the term FUD, bit in this case it's proveably true. Even if these companies collapse in 5 years, thats a lifetime away in tech years, not an immediate bubble.
Could you show me proof of the 3-5 year runway thing? I’m not saying it’s outlandish but I’m skeptical.
I don't think it's particularly silly when the rest of the economy is by all indications in a deep recession. If the tech market is literally the only thing holding up the market then you have to ask how and why.
I suspect that isn't true
S&P500 isn’t “the economy” but in the context of talk of a bubble it seems like we’re talking about equities not the whole economy. So let’s just keep taking the short cut …
The top is over performing so concentration is real but it’s not the only growth driver:
https://www.fool.com/research/magnificent-seven-sp-500/
The return / valuation concentration prob not as titillating as the PE run up:
https://finance.yahoo.com/news/surprisingly-excellent-run-st...
True or not true hard to say without better definitions of terms but seems like current profile is not ultra common in history but it’s not a bunch of losers getting diluted out.
We're at a record number of subprime borrowers falling behind on car loans, which historically is a really bad economical sign, consumer sentiment is at an all time low and the labor market isn't looking great either. Anecdotally, prices have risen sharply and people are getting sharply priced out of basic necessities due to rising costs.
Can you please share a link with the data?
The subprime loan data can be seen here [1] and consumer sentiment here [2]. Job losses are much harder to estimate given that the current admin is actively refusing to post job numbers (for perhaps, obvious reasons) but we've seen other sites estimate that we're seeing record layoffs [3]. And that's before we get into stuff like tariff policy or the hidden costs of throwing a lot of government employees into unemployment.
[1] https://www.reuters.com/business/autos-transportation/record...
[2] https://www.sca.isr.umich.edu
[3] https://www.cbsnews.com/video/october-marks-worst-layoffs-22...