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The AI "bubble" won't burst just like the "internet bubble" didn't burst. the dotcom bubble was a result of investors jumping on the hype train all at once and

The AI "bubble" won't burst just like the "internet bubble" didn't burst. the dotcom bubble was a result of investors jumping on the hype train all at once and then getting off of it all at once. Yes, investors will eventually find another hype train to jump on, but unlike 2000, we have tons of more retail investors and AI is also not a brand new tech sector, it's built upon the existing well established and "too big to fail" internet/ecommerce infrastructure. Random companies slapping AI on things will fail but all the real AI use cases will only expand and require more and more resources. OpenAI alone just hit 800M MAU. That will easily double in a few years. There will be adjustments,corrections and adaptations of course but the value and wealth it generates is very real. I'm no seer, I can't predict the future but I don't see a massive popping of some unified AI bubble anytime soon.

ACCount37 1y ago
People don't have the grasp of just how insane that "800M MAU and still growing" figure is. CEOs would kill people with their own bare hands to get this kind of userbase. OpenAI has ~4B of revenue already, and they aren't even monetizing aggressively. Facebook has an infinite money glitch, and can afford to put billions in the ground in pursuit of moonshots and Zuck's own vanity projects. Google is Google, and xAI is Elon Musk. The most vulnerable frontier lab is probably Anthropic, and Anthropic is still backed by Amazon and, counterintuitively, also Google. At the same time: there is a glut of questionable AI startups, extreme failure rate is likely - but they aren't the bulk of the market, not by a long shot. The bulk of the "AI money" is concentrated at either the frontier labs themselves, or companies providing equipment and services to them. The only way I see for the "bubble to pop" is for multiple frontier labs to get fucked at the same time, and I just don't see that happening as it is.
- hiq 1y ago
  > they aren't even monetizing aggressively That's one of the issues with the current valuation: it's unclear to me how many of the 800M MAU will stick to ChatGPT once it monetizes more aggressively, especially if its competitors don't. How many use ChatGPT instead of Claude because the free version offers more? How many will just switch once it doesn't anymore? OpenAI is already at a 500B valuation; the numbers I could find indicate that this number grew 3x in a year. One can reasonably ask if there's some ceiling or if it can keep on growing indefinitely. Do we expect it to become more valuable than Meta or MSFT? Can they keep raising money at higher valuations? What happens if they can't anymore, given that they seem to rely on this even for their running costs, not even speaking about their investments to remain competitive? Would current investors be fine if the valuation is still 500B in a year, or would they try to exit in a panic sell? Would they panic even if the valuation keeps growing but at a more modest pace?
  - ACCount37 1y ago
    My intuition is that ChatGPT has the mindshare of the "normal user" userbase, which is powerful. Ask Apple. You can still squander a lead like this, but not easily. GPT-5 was in no small part a "cost down update" for OpenAI - they replaced their default 4o with a more optimized, more lightweight option that they can serve at scale without burning a hole in their pockets. At the same time, their "top end" options for the power users willing to pay for good performance remain competitive. The entire reason why OpenAI is burning money is "their investments to remain competitive". Inference is profitable - R&D is the money pit. OpenAI is putting money into more infra, more research and more training runs.
    - hiq 1y ago
      I don't follow the comparison to Apple. Apple phones are not like Android phones, Apple computers are not like Windows computers. There's a real difference between Apple products and others. There's definitely an appeal for devices that just work and are polished (or so I've heard). I don't think ChatGPT has done that in its space.
      - ACCount37 1y ago
        If you want a smartphone but know nothing about smartphones? You get an iPhone and don't think about it. If you want an AI chatbot but know nothing about AI chatbots? ChatGPT is the go-to. Almost synonymous with AI now. Same exact broad appeal.
        hiq 1y ago
        There's a wild difference in features and ecosystem when using an iPhone, as well as quite some friction in changing, to the point that it's way more than simple brand recognition. iPhones tend to be more expensive, yet they are bought by a wide range of consumers who value them and the Apple ecosystem, the customer support etc. If brand recognition were the main reason for consumers to choose Apple devices, they'd have all switched to Android once they realized they can just pay half. This friction to switch is just not there for chatbots offering substantially equivalent features. That's why ChatGPT is still mostly free: most users would leave the moment they impose stricter limits. If you know nothing about smartphones but they cost a significant amount of your income, well you try to know more before you buy anything. There's no reason to do that for chatbots yet given that they're free to use, just try it out and stick to the first one you tried until they make it bad enough for you to want to switch.
dcminter 1y ago
The dot com crash was a thing though. The bubble burst. It's just that there was real value there so some of the companies survived and prospered. Figuring out which was which was absolutely not possible at the time. Not many people foresaw Sun Microsystems as being a victim and nor was it obvious that Amazon would be a victor. I wouldn't bet my life savings on OpenAI.
- notepad0x90 1y ago
  Google, Microsoft, Apple, the value it's generating for them alone is enough of a demand to refute the "bubble" claims. the hype bubble will surely burst, but people are using it everyday. This is like saying the "crack cocaine" bubble will burst once people hear about its side effects (or alcohol lol). A reduction, sure. But not a crash. I wouldn't be my life savings on OpenAI either FWIW.
  - dcminter 1y ago
    People were using Amazon every day. But people were also using Pets.com every day. A bubble bursting doesn't make everything disappear. Just some things.

ACCount37 1y ago

People don't have the grasp of just how insane that "800M MAU and still growing" figure is. CEOs would kill people with their own bare hands to get this kind of userbase. OpenAI has ~4B of revenue already, and they aren't even monetizing aggressively. Facebook has an infinite money glitch, and can afford to put billions in the ground in pursuit of moonshots and Zuck's own vanity projects. Google is Google, and xAI is Elon Musk. The most vulnerable frontier lab is probably Anthropic, and Anthropic is still backed by Amazon and, counterintuitively, also Google. At the same time: there is a glut of questionable AI startups, extreme failure rate is likely - but they aren't the bulk of the market, not by a long shot. The bulk of the "AI money" is concentrated at either the frontier labs themselves, or companies providing equipment and services to them. The only way I see for the "bubble to pop" is for multiple frontier labs to get fucked at the same time, and I just don't see that happening as it is.

hiq 1y ago
> they aren't even monetizing aggressively That's one of the issues with the current valuation: it's unclear to me how many of the 800M MAU will stick to ChatGPT once it monetizes more aggressively, especially if its competitors don't. How many use ChatGPT instead of Claude because the free version offers more? How many will just switch once it doesn't anymore? OpenAI is already at a 500B valuation; the numbers I could find indicate that this number grew 3x in a year. One can reasonably ask if there's some ceiling or if it can keep on growing indefinitely. Do we expect it to become more valuable than Meta or MSFT? Can they keep raising money at higher valuations? What happens if they can't anymore, given that they seem to rely on this even for their running costs, not even speaking about their investments to remain competitive? Would current investors be fine if the valuation is still 500B in a year, or would they try to exit in a panic sell? Would they panic even if the valuation keeps growing but at a more modest pace?
- ACCount37 1y ago
  My intuition is that ChatGPT has the mindshare of the "normal user" userbase, which is powerful. Ask Apple. You can still squander a lead like this, but not easily. GPT-5 was in no small part a "cost down update" for OpenAI - they replaced their default 4o with a more optimized, more lightweight option that they can serve at scale without burning a hole in their pockets. At the same time, their "top end" options for the power users willing to pay for good performance remain competitive. The entire reason why OpenAI is burning money is "their investments to remain competitive". Inference is profitable - R&D is the money pit. OpenAI is putting money into more infra, more research and more training runs.
  - hiq 1y ago
    I don't follow the comparison to Apple. Apple phones are not like Android phones, Apple computers are not like Windows computers. There's a real difference between Apple products and others. There's definitely an appeal for devices that just work and are polished (or so I've heard). I don't think ChatGPT has done that in its space.
    - ACCount37 1y ago
      If you want a smartphone but know nothing about smartphones? You get an iPhone and don't think about it. If you want an AI chatbot but know nothing about AI chatbots? ChatGPT is the go-to. Almost synonymous with AI now. Same exact broad appeal.
      - hiq 1y ago
        There's a wild difference in features and ecosystem when using an iPhone, as well as quite some friction in changing, to the point that it's way more than simple brand recognition. iPhones tend to be more expensive, yet they are bought by a wide range of consumers who value them and the Apple ecosystem, the customer support etc. If brand recognition were the main reason for consumers to choose Apple devices, they'd have all switched to Android once they realized they can just pay half. This friction to switch is just not there for chatbots offering substantially equivalent features. That's why ChatGPT is still mostly free: most users would leave the moment they impose stricter limits. If you know nothing about smartphones but they cost a significant amount of your income, well you try to know more before you buy anything. There's no reason to do that for chatbots yet given that they're free to use, just try it out and stick to the first one you tried until they make it bad enough for you to want to switch.

dcminter 1y ago

The dot com crash was a thing though. The bubble burst. It's just that there was real value there so some of the companies survived and prospered. Figuring out which was which was absolutely not possible at the time. Not many people foresaw Sun Microsystems as being a victim and nor was it obvious that Amazon would be a victor. I wouldn't bet my life savings on OpenAI.

notepad0x90 1y ago
Google, Microsoft, Apple, the value it's generating for them alone is enough of a demand to refute the "bubble" claims. the hype bubble will surely burst, but people are using it everyday. This is like saying the "crack cocaine" bubble will burst once people hear about its side effects (or alcohol lol). A reduction, sure. But not a crash. I wouldn't be my life savings on OpenAI either FWIW.
- dcminter 1y ago
  People were using Amazon every day. But people were also using Pets.com every day. A bubble bursting doesn't make everything disappear. Just some things.