Are we in an AI bubble?

Are we in an AI bubble?

Yes
6
60%
No
3
30%
Not sure
1
10%
 
Total votes: 10

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wjfox
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Are we in an AI bubble?

Post by wjfox »

A recent quote from Rep. AOC:

https://ocasio-cortez.house.gov/media/p ... -ai-bubble
"Just this morning, the Wall Street Journal reported a significant drop in the U.S. stock market with the headline ‘AI bubble Fears Hit Stocks.’

Now, this also contrasts with what we've been hearing from the Trump Administration - that the economy in general is thriving. And he's been saying that the economy is booming.

But it's only seven tech companies that are booming - Microsoft, Google, Amazon and Meta - and they're driving this growth in just one sector: AI.

So the entire U.S. economy growth can be tracked down to seven companies and their AI growth, specifically. At least 40% of economic growth this year is attributed to these companies alone, and 80% of stock gains this year came from AI companies.

But people are justifying these levels of investment because of the promises that the CEOs make, that there will be a return on that investment.

So for a company like OpenAI, their value is based on the expectation that they're going to figure out how to make a profit out of it. And they haven't."

I'm old enough to remember the dotcom bubble of the late '90s (a totally crazy time!), and there are striking parallels.

On the other hand, AI is a fundamentally new technology with potential to be profoundly transformative in many, many ways. The models continue to improve rapidly, as we've seen this week with Gemini 3. No slowdown in hardware capabilities, either (robots, chips, etc).

My sense is that we are, indeed, in an investment bubble (correction likely coming in the next 1-2 years). Many smaller companies will fail and be absorbed into the major players who will consolidate. But the underlying tech will continue to progress in leaps and bounds.

With its vast financial and compute resources, alongside its human capital, I'm beginning to think that Google will emerge as the winner. OpenAI seems quite vulnerable by comparison.

Discuss...


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firestar464
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Re: Are we in an AI bubble?

Post by firestar464 »

Yeah, we're obviously in a bubble. The question is whether the companies that survive the bubble will be able to service LLMs+scale to AGI profitably.
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Yuli Ban
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Re: Are we in an AI bubble?

Post by Yuli Ban »

Absolutely
A couple of posts I've done on Reddit:


_____________


I've been using ChatGPT since 2022. I still fiddle with it a bit for some non-plot bunnies just for cheap-o discussion/note analysis, except not even that anymore because of a major reason:

It fucks it up every. Single. Time.

My favorite thing to do with Chat now is to see how its commonsense reasoning utterly implodes at tasks even a 2 year old could figure out. It's actually incredibly easy to do this, and it makes me severely skeptical of the whole "vibe coding"/"vibe [x]-ing" trend. Chat, and other LLMs, will consistently output content that looks good. It seems even professional. Until you actually read it. Which I do; I tend to listen to everything I read, so almost immediately there are severe logical problems. Sometimes it's just down to its context window, where it fails to parse data because there's too much. But very often, it's not that at all. You give it an instruction to do something ultra basic, it fucks it up. You ask it to figure out how it fucked up, it can't at all and winds up running in circles, devolving in coherence over time, panicking and flailing desperately to output anything that sounds right. You track its "logic" in gasping awe as it you witness it commit to 36,360° circles around the actual commonsense answer because it lacks any sort of grounded state or adversarial agency that could act as a fact checker. You might wind up spending a full hour screaming at it to just use basic 3-year-old-tier logic to figure out a problem that is obscenely obvious to you, and a three year old, even without access to the correct information. Except it does have access to the correct information and yet refuses to use it. You are all-capsing at it to stop being stupid and figure out why someone who is 28 years old is not older than someone who is 33. And then it fails. Then you retry the output and it succeeds. Then, curious, you reroll it again. And it fails again.

It is outrageous how unintelligent ChatGPT is when you really start testing it for commonsense reasoning.

This is what really hinted to me that the Attention-based Transformer was not the direct path to AGI and the mania that got kicked up for scaling them is going to end catastrophically at best.

If not for China keeping genuine AI research going, I would not hesitate to say that the AI bubble bursting could very well lead to nuclear AI winter, just due to the sheer negative reputation AI had developed that wound up leading to people shitting on or even denying the existence of good AI research.

I could even tell you why generative AI could have led to good stuff but we got caught up on a single architecture whose limitations were literally well known and was never intended to be the endpoint in and of itself.

It's just frustrating. So much good could be done, but now AI and robotics has become a byword for everything wrong in modern times when it shouldn't be, and eventually the Potemkin village will fall over and collapse.

_________

Post 2


Transformers are inherently stateless as a rule, and our heavy handed ways of grounding them is too ineffective to be of any use. Almost all use of LLMs doesn't require exploring the breaking points of commonsense reasoning and logical deduction, so it’s extremely easy to be fooled by their outputs into thinking they're closer to AGI than they appear.

Attempting to get an LLM to think logically always collapses into statistical probability. This can mimic intelligence but it differs extraordinarily because it's predicting the most likely next token in a sequence without actually checking to see if it's the correct one.

Typically most likely is correct for most casual instances. The edge cases outside of distribution are where the models completely collapse.

Unlike fluid intelligence which can form abstractions to predict out-of-data distribution, transformers don't "know" that they're out of distribution and keep assuming everything they predict remains the most accurate output due to most likely prediction.

They possess extremely rudimentary understanding of concepts through statistical pattern correlations in their weights.

With a proper tree search algorithm, they could more effectively ground concepts between higher and lower dimensional states.

(i.e. High-dimensional states = rich vectors storing many independent semantic features at once; low-dimensional states = compressed bottlenecks for routing and final decision-making)

Scaling up increases the corpora from which it can draw to make predictions. Time test compute can sort of brute force a kind of search. Thing is, there are more effective ways to do both, and limits to both as well.

I'm not saying I know for sure how to create AGI. Just that there are clear flaws to relying solely on transformers, and these flaws have been known for a long time.

The reason why the field is so sure they're the way comes down more to a bet that you can brute force out-of-distribution generalization and capability with big enough data and enough compute to power agents.

That's my response to /u/SgathTriallair as well. It makes logical sense why the labs are betting big on scale. It's not like they don't have some operational logic.

My point is more that a lot of this momentum was started by legit hysteria. Everyone points to ChatGPT, but the actual turning point came half a year earlier, with DeepMind's Gato. That was the first model in history that displayed signs of true generalization as a result of multimodal training. So the hypothesis is that, through enough scaling and raw brute force, you can get to AGI. This isn't my guess of it; this is literally the operational logic, they're open about this, that's why they're doing what they're doing and have never shied away from this being why we're seeing the current paradigm pushed. Because ostensibly, it doesn't matter how you get to AGI, even if it's through the most blisteringly inefficient method. As long as you get there, the AGI will optimize itself.

It's like it doesn't matter how you create a black hole (you can create one by compressing any matter or energy into a dense enough point, even if that energy is light or the electromagnetic force); once you create one, it has no hair.

The problem in retrospect is that scaling this up wasn't easy and the generalization could actually be explained as the result of multimodal data prediction mimicking generalization. The result being that the American AI labs fanatically maniacally rushed to exploit the first possible sign of AGI without really testing extensively to see if this was actually smoke from fire or actually just vapor coming off lukewarm water.

Even
one of the co-creators of transformers has come out and said what most people in 2021 were saying
, that the extreme focus on transformers has not actually resulted in anything materially better than what we had back then, but picking the low hanging fruit of what transformers can do made us think otherwise because there was a lot of fruit to pick.

Source
2


Because again, transformers are important.

A tokenizer can be used to organize the data of a proper AGI system. It's arguably the most important part of it. But it's like pretending the ICE is the car, or the mitochondria is the cell.

This is why I said China is likely ahead. They aren't neglecting neurosymbolic and neuromorphic AI research. In fact, one of the most interesting AI news of the entire year was their "Darwin Monkey" computer. It could very well be that slow and steady wins the race after all.

To that end, machine learning is important to reach AGI, but my philosophy is there's still a bit more beyond it. Probably the biggest reason why a lot of the big names aren't budging is because some of the proponents of those other architectures (Yann LeCun, Gary Marcus) are assholes. Even if they're assholes with a point.

LeCun outright says that you need transformers to get to AGI, but it would be wrapped by a neurosymbolic system. I believe Demis Hassabis also has a point with a Tree Search tool added to it.

Edit:

This
tweet
should be seen as ground zero for the Generative AI bubble. It was at this point, this exact point that the American AI field began obsessing over transformers and scale as the path to AGI, because of the tease of generalization Gato gave us.

And to the idea that surely the AI labs wouldn't be so stupid as to invest this much time and effort into something they know can't reach AGI, you'd be surprised. Even Demis Hassabis, for a brief moment in time, claimed that AGI was less than 5 years away, and that tone shift came only after Gato and the hype it caused, that was supercombined into the ChatGPT explosion. Then that was further compounded with the discovery of reasoning. Ironically
, LLM reasoning dates as far back as 2020


That's the cold ugly truth of the matter: we think there's way more AI progress happening than might be true under the surface because we're simply seeing what token prediction can do. It's literally like inventing the internal combustion engine and cranking up its power, and being surprised that it can cause things to move faster or even lift off the ground. But there's a reasonable limit to its power, and once you've created a 10,000 pound ICE, you start hitting diminishing returns before you get to the point you can attach it to your car and fly to the moon.

That's this. There was a crazy amount of stuff LLMs could do that we've been discovering, but because it resembles the emergence of general AI, it gets obfuscated that what we're actually doing it prodding the capabilities of transformers, not actually constructing AGI systems.

Now if you change tactics and design, things will shift accordingly.

__________


This is the same reason why I'm completely unimpressed with Gemini 3. The higher level stuff— you know, vibe coding simulations and small games, that's almost expected. That sort of STEM-heavy stuff seems to be what LLMs are currently aimed towards, so it's become decreasingly amazing to see them do anything that isn't a high level program that requires using something like C or C++ or Assembly

Because then I try to use Gemini for those plot bunnies
And it just fucks it up every. Single. Time. Even now.
It's reaching a level I could comfortably describe as an "uncanny valley." Somehow it's able to do somewhat impressive coding tasks, it can intelligent search a data corpus to make minor scientific discoveries, it can do all this and that, but give it a commonsense reasoning task telling it that if a person is in one place and then they're in another place an hour later, what is the logical assumption about what happened in that hour, and it's a complete crapshoot if it guesses "they traveled to the second place" or tasks like that
"This character lived in place A in X year, so what does that mean about when that character lived in place B in Y year? (read the document I gave you, it has the answer"
A: most logically incoherent gobbledeebook you've ever heard
Me: "That's stupendously incorrect. Try again, here is the literal quote, copy pasted
A: doubling down on the incorrect answer, gets even more ass-backwards incorrect
Me: You incompetent fucking clanker!!

Commonsense reasoning is one of those signs of general intelligence, at least to me. The fact all current LLMs suffer so catastrophically and magnificently at logical deduction tells me they all still are horrifyingly ungrounded and misaligned.

But in the short term, this is why I think there's a bubble. The ELIZA effect causes us to overestimate just how genuinely "good" these AIs are
Being that LLMs are, ahem, LANGUAGE models, and we are language-driven creatures, that's not really surprising that we're so totally fooled
When the venture capitalists realize how little LLMs and diffusion models can actually do without extensive guidance (which is the opposite of what people expected AI to be used for, the AI themselves are supposed to be the automation, not human "prompt engineers"), that's when I think the curtains will drop

The reason why I don't think it will happen all at once is due to the same effect
The ELIZA Effect isn't the same as the futureshock of being able to order pets from some shady website or visiting a dinky Web 1.0 webforum and desperately trying to convince yourself you live in a William Gibson cyberpunk novel surrounded by flying cars and androids but it's also 1998 and you're on dial-up in a flat watching VHSes. It's an actual psychological effect that can make you far more irrational and think you're conversing with an actual genuine artificial human entity.

It works on ME every time I use ChatGPT or Gemini and wind up freaking out in a rage over these statistical probabilistic language models not having humanlike commonsense reasoning
So the bubble might not "pop" as much as it could "deflate" over a longer period of time

Which gives the alternative methods just enough time to get up and running (most likely in China, maybe DeepMind has something too, maybe even Ilya?) and that could make it seem like the bubble "never" burst, like we went from AI models that stole everything to produce barely passable slop, and then suddenly we got proto-general AIs that actually legitimately learn as they go
And remember my friend, future events such as these will affect you in the future
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Re: Are we in an AI bubble?

Post by wjfox »

Yuli Ban wrote: Fri Nov 21, 2025 4:47 am Absolutely
A couple of posts I've done on Reddit:


_____________


I've been using ChatGPT since 2022. I still fiddle with it a bit for some non-plot bunnies just for cheap-o discussion/note analysis, except not even that anymore because of a major reason:

It fucks it up every. Single. Time.

My favorite thing to do with Chat now is to see how its commonsense reasoning utterly implodes at tasks even a 2 year old could figure out. It's actually incredibly easy to do this, and it makes me severely skeptical of the whole "vibe coding"/"vibe [x]-ing" trend. Chat, and other LLMs, will consistently output content that looks good. It seems even professional. Until you actually read it. Which I do; I tend to listen to everything I read, so almost immediately there are severe logical problems. Sometimes it's just down to its context window, where it fails to parse data because there's too much. But very often, it's not that at all. You give it an instruction to do something ultra basic, it fucks it up. You ask it to figure out how it fucked up, it can't at all and winds up running in circles, devolving in coherence over time, panicking and flailing desperately to output anything that sounds right. You track its "logic" in gasping awe as it you witness it commit to 36,360° circles around the actual commonsense answer because it lacks any sort of grounded state or adversarial agency that could act as a fact checker. You might wind up spending a full hour screaming at it to just use basic 3-year-old-tier logic to figure out a problem that is obscenely obvious to you, and a three year old, even without access to the correct information. Except it does have access to the correct information and yet refuses to use it. You are all-capsing at it to stop being stupid and figure out why someone who is 28 years old is not older than someone who is 33. And then it fails. Then you retry the output and it succeeds. Then, curious, you reroll it again. And it fails again.

It is outrageous how unintelligent ChatGPT is when you really start testing it for commonsense reasoning.

This is what really hinted to me that the Attention-based Transformer was not the direct path to AGI and the mania that got kicked up for scaling them is going to end catastrophically at best.

If not for China keeping genuine AI research going, I would not hesitate to say that the AI bubble bursting could very well lead to nuclear AI winter, just due to the sheer negative reputation AI had developed that wound up leading to people shitting on or even denying the existence of good AI research.

I could even tell you why generative AI could have led to good stuff but we got caught up on a single architecture whose limitations were literally well known and was never intended to be the endpoint in and of itself.

It's just frustrating. So much good could be done, but now AI and robotics has become a byword for everything wrong in modern times when it shouldn't be, and eventually the Potemkin village will fall over and collapse.

My experience with ChatGPT has been the polar opposite of yours.

Perhaps 5-10% of its output is below par, but other than that, it's been an amazing tool for me. Particularly with coding, and generating graphs.

It frequently shows nuance and subtlety around complex topics, and it's helped me build an incredibly powerful search engine/database.

I can't imagine what sort of prompts you're feeding it to get such terrible results. You make it sound like it's worse than CleverBot circa 2010. :?
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Re: Are we in an AI bubble?

Post by firestar464 »

Yeah it's obviously not "le AGI" or whatever but it's hardly as bad as what Yuli is describing lol.

also "stole everything" bruh what
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Re: Are we in an AI bubble?

Post by weatheriscool »

A.i is one of the few things I expect to advance and is probably unstoppable. Even if a few major countries like the United states voted in a Amish government that was completely against tech this doesn't stop the rest of the world advancing it. Example China.

I also suspect that humanoid robots powered by this advanced a.i will become common soon and take over most of production as that is the will of the super rich and controllers of the chain of production.

If bubble is a few companies go under because they can't compete? Maybe. I'd say meta is probably fucked in the roam of a.i. Can't compete with google, openai and grok.

But I suspect that more companies will form as humanoid robotics enter the seen so any bubble won't be long lasting.
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Re: Are we in an AI bubble?

Post by firestar464 »

Actually, what companies go down depends on the scale of the losses they have accrued, as well as whether they have other capital or receive bailouts to prevent total collapse.
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Re: Are we in an AI bubble?

Post by Yuli Ban »

wjfox wrote: Fri Nov 21, 2025 10:16 am

My experience with ChatGPT has been the polar opposite of yours.

Perhaps 5-10% of its output is below par, but other than that, it's been an amazing tool for me. Particularly with coding, and generating graphs.

It frequently shows nuance and subtlety around complex topics, and it's helped me build an incredibly powerful search engine/database.

I can't imagine what sort of prompts you're feeding it to get such terrible results. You make it sound like it's worse than CleverBot circa 2010. :?

TLDR: I'm holding LLMs and diffusion to way too high of a standard. I want them to be near or par-human level. The problem is exactly what you said: they can SEEM capable enough, but that disarms you into thinking they're more capable than they actually are


Perhaps it's mostly my usecases indeed, but I've had dreadful experiences with LLMs. So dreadful that I went out of my way to study machine learning and transformers just to understand how.

Also let me stress something

The reason why I feel this way isn't because it's worse than bots like Cleverbot (I understand what you mean, I'm just keeping that analogy going for the sake of this). It's precisely because it works as well as it does, and then collapses spectacularly at that last mile, that caused the curtains to fall for me, because I realized that if AI is actually this brittle despite seeming so strong, that's far more frustrating than an AI that doesn't work at all.

It CAN function well, it's clearly doing it so well as to cause rational people to fall in love with it, and make money off of it.

That's why I keep comparing the current level of AI to level 2+/level 3 autonomy in cars: it's at that bizarro liminal space tier where it's automated just enough to cause you to feel disarmed, but actually cannot handle anything outside that automation and will screw up in ways that force you to keep your attention.
My hope for years and years was that we'd be past this by now, that the liminal space was a 2021-2023 sort of space, and that by 2025 we'd have models that wouldn't be making such stupid mistakes. That even Gemini 3 Pro is still making 4o-level stupid mistakes with very little effort, sometimes even with very great effort, is what's telling me something isn't right under the hood, that we need to focus on strong architectural changes to make the most out of the big data we have, if we even need big data at all.

So if you want an answer to why I'm not greatly impressed as you'd think I should be, it's because we're in 2025 where I had hoped in 2020 we'd be in 2023, and I'm just not seeing enough effort made to chase the parts I think will get us to where we ought to be, when I feel like we could be getting to that level in very short order. It's that frustration of "Why are we still dealing with this? Why haven't we solved this? This model shouldn't be still having trouble with this or that," and then delving into the research to see that it's essentially because we're still using 2022-era models bloating extraordinarily with scale, modified somewhat with scale and time-test compute, but still floating above ungrounded higher and lower dimensions with very rudimentary world models.
Getting even a basic grip on optimization through gradient descent, how parameters update across layers, and how architectures like attention modules route information across a sequence, matrix multiplication and partial derivatives, and delving into representation space, high and low dimensional states, and whatnot was starting to make me dangerously Yann-pilled, because it started seeming like the ultra basic grasp I had before on this (that transformers didn't have a grounded internal state and really are "just" predicting the next token) wasn't wrong.

Predicting the next token in a sequence can mimic competent intelligence because when you're trained on a large enough corpus, you'll connect statistical regularities behind how people describe reality and that can create an auto-emergent world model. If the training distribution contains richly structured, self-consistent text, the continuation looks intelligent.

But the moment the tokenizer steps outside that distribution?

The model does not notice that it has stepped out.

There is no meta-cognitive boundary that says: "I don't know. I am uncertain." It can ask itself in a larger sense and a reasoning model, in an extremely rudimentary way can act as its own adversarial agent, but I've seen dozens of instances where the model challenges itself, only for the final output to completely ignore that challenge. Truth is the result of adversarial filtering against reality.

Language does not do that filtering. Prediction does not do that filtering. That makes no sense just writing that. So transformers, even reasoning models, will create plausible lies, confident hallucinations, seamlessly fluent contradictions, and blatantly false information because it has no mechanism to detect or resist that.
This is why I keep saying that a shift to neurosymbolic language models— using the AlphaZero monte carlo tree search method DeepMind development, developing adversarial agents, memory compute, internal reasoning as well— would get us to far, far more robust models than the pure attention-based transformers we have now, and if we can get to that, we can get to all the "good" stuff too

We'll get to language models that don't make basic blatant commonsense reasoning errors, ACTUAL reasoning, understanding of concepts, a very robust multimodal world model, all that fun stuff
So that you don't have to pick and choose which LLM ranks slightly higher on some arbitrary benchmark that is 5% better at Python and JavaScript than another one, but every NSLM would be able to learn and use any programming language at any level. And inevitably you get the kinds of AI models that can go outside training distribution and generalize beyond what they've been trained on, which would be the greatest boon for scientific research.

It's just that this would require some deep research and shifting focus that the current American venture capitalists aren't interested in or probably even aware of

People would be way more accepting of AI, even AI art, if there was more than generative AI being promoted heavily, but that would require more AI than generative AI be capable of extensive end-to-end automation.

Like I said, artistry tends to be the one field people actively want to do and get paid for, and that's the first source of extensive automation, for stuff that still looks wonky half the time, and the other half still carries the question "Why didn't you pay an artist for it?" especially for large companies, which is the entire point I'm making. In our current society, we don't have the privilege of simply saying "I got laid off, now it's time to relax."

AI is in that weird aforementioned liminal space where it's capable enough to affect some fields, but can't generalize further, where it can make high-end images but can't figure out basic logical puzzles. It's good enough to take creative jobs, and companies keep trying to make it take various programming jobs, but finding that it still hallucinates too much and vibe coding isn't enough to replace teams in reality, so that's premature automation that still affects people

Getting to the point AI can actually positively affect society will take us through a period where pretty much only the oligarchs actually benefit for a short moment until the disruption affects their bottom lines, and that's besides the point of if we even can reach full generalization off current methods

I know that sounds incoherent on the surface, but that's literally just me observing the current trends, reactions, and capabilities.

AI cannot:
  • automate blue collar jobs (rigid mechanization/automation can do factory work, fluid automation/chaos is beyond us)
  • automate all white collar jobs (same fluid automation/chaos is the problem; fuzzy automation is what generative AI can do well, and that's why it's creative/entertainment and some coding jobs that are being automated since you don't need accuracy or spontaneous adaptivity to create these sorts of things)
  • passively generate income (the economy doesn't work in a way where that would even be sustainable; inevitable AI power jockeys would do the same thing this the crypto bros did with bitcoin mining ten years ago in desperate attempts to get their AI to earn more)
  • cure diseases (it can help, but imperfectly, and to actually go the distance it'd need to generalize beyond its training distribution)
  • radically advance science (see above)
  • build housing, repair roads, improve public infrastructure (for the same reason we don't have general blue collar automation)
And much more

AI can:
  • create convincing images and videos (which inevitably feed into misinformation and disinformation and social disorder, and is imperfect enough that it still can't replace the full breadth of it)
  • create human-like text (see above)
  • create human-like music (see above)
  • code programs to an extent (but only to the limit of what languages it knows)
  • occasionally solve high end problems (AlphaEvolve, AlphaGeometry)
For the average person, the latter is fun, very occasionally helpful when a chatbot helps diagnose a disease correctly, but it doesn't improve their life in material ways, and seeing new AI development and research only be deployed to take away the only jobs people enjoy doing in an economy where everyone's feeling increasingly defeated and crushed by overwork, it just comes off as almost inhuman and sadistic and far more likely to cause people to turn against further AI research in a moment when society's threads are actively being snipped by malevolent oligarchs


For a creative, the latter actively threatens their material existence, and the former isn't a thing so they have nothing to fall back on.

Plus, there's the fact said models are in the hands of the worst people right now.
If we keep the current system going, then solving the former actually makes things worse for a time, because now we have AI that can do the blue and white collar jobs, to make their bosses more money, in what little time exists before the AI crashes capitalism itself and likely takes the bosses' money from them.

I'm saying that right now, AI isn't good enough to give us the stuff people generally want out of AI, and the companies selling AI are doing so to reduce labor headcounts, not improve society.
There is no safety net, "AI-generated income" isn't a thing, meanwhile actually running the data centers isn't going to help anyone's bills all the while the administration is actively undermining renewables and barely helping nuclear in lieu of a dying energy source. But we're still seeing AI get pushed into various fields.
People keep saying "push for basic income," but there's no concrete plan for that, there's no concrete organized movement for that, and you'd think there should be more effort towards that right now, rather than later.
The cold ugly fact is we're probably going to get extensive or universal task automation, with no basic income or safety net. It'll still be "debated" as the vast majority of jobs are being automated, with no conclusive solution.

In a society where everything is structured to benefit the whole of society, people won't care nearly as much if there are AI-generated advertisements and newscasters (well Westerners may)
That's why I say China will navigate this so much better, and explains why they're so optimistic about AI

Consider this
There is extreme social malaise today that didn't exist even ten years ago, and even ten years ago we were still tapering off Occupy and right before the rise of MAGA
Twenty, especially thirty years ago, if generative AI arose in the 90s, would people have cared anywhere near as much? Artists absolutely would have, many would boycott anything made by a computer (many literally did, they hated electronic music, digital art, and CGI back then), but it probably would have been seen as one of those cool aspects of the early internet that you could type in a prompt to something and get images out of it, and people were well off enough and digital infrastructure was so much less ingrained in society that it didn't pose nearly as much of a threat
That was my point, that we're in a period of great confluence of extreme social upheaval, and AI being unable to do the materially good things is only going to exacerbate that

Its greatest strength at this moment is that it can do interesting creative and programming work, that's also its greatest weakness. If the only thing people associate AI with is slop, then you'll eventually get people asking "What exactly do we lose if we get rid of AI?" more and more if the costs of maintaining and training AI keep rising with no immediate benefit beyond that. No one will care about losing cancer and diabetes cures, fusion power, room temperature superconductors, environmental fast-fixes, space travel, etc. because that was already abstract promises anyway that wasn't being met by the AI they were seeing in their daily lives, being pushed to them by people like Elon fucking Musk and Sam goddamn Altman, and no one else they care about.



Sorry if I'm rambling, I'm just genuinely dismayed extraordinarily at the state of AI in 2025, especially on a social level. It feels like it often just gets sanded down to "Luddites bad" and "AI bad" and I have a particularly nasty itch whenever I see AI bros conflate Gen AI with ALL AI and thus get irrationally angry at people saying "I hate generative AI" as if that means they want to live in caves and die in childbirth like it's 10000 BC when quite literally said same AI bros themselves can't stop admitting "We need to scrape data without paying copyright dues if we want AI to advance" which is just, it's like throwing gasoline on a fire, it's complete Versailles aristocrat level "I don't get why the filthy rabble are revolting" levels of out-of-touchness

Like I get it, I don't hate AI image gen anywhere near as much as others do, I'd probably be in a worse state with my own projects without it, but for the love of Christ, can we not but make a concerted effort to promote and heavily advertise AI being used for medical and scientific purposes instead of screaming out how cool AI Slop Generator #46,853 is every week

And to that I'm saying "We probably genuinely can't, because the AI we have isn't robust enough to do that yet. We have experiments, but they're often embellished and not as impressive as we hoped at this exact moment in time. But if we had a far more robust type of AI model, we could literally zoom past these problems within 5 years."



TLDR 2:
I suppose that's where I find all my rage like a rat in a cage: my mentality is, circa late 2025, this should not still be happening
I had expected the frontier models of today to be robust enough to almost not even need indepth instructions so long as they can follow uploaded or prompted data well enough, and to arrive at logical conclusions from commonsense reasoning
Instead they feel way more like the 2023 era models juiced up with time-test compute and more data
So basically I had hoped we'd be onto a new generation by now is all and that's what throws me off, that's why I delved into ML science just to find out why transformers make these mistakes
It's not like I'm not optimistic we can't get past this. Just the opposite
More frustration that we're still here now, when I want to be there now
And remember my friend, future events such as these will affect you in the future
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Re: Are we in an AI bubble?

Post by firestar464 »

If the AI bubble bursts, what will it mean for research?

https://www.nature.com/articles/d41586-025-03776-0
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Re: Are we in an AI bubble?

Post by firestar464 »

Anyway, Yuli: Your statement that LLMs are not human-level/AGI are obviously correct; I don't think anyone's disputing that here. It's worth noting that your current reply seems to be at odds with the experience you described in your first, which suggested that LLMs were utterly unusable.

Yes, they aren't very world-model based. Maybe Google's attempts to make their AIs more compatible with robots will bear fruit; who knows. IDK. Don't know enough about this area.

It's also worth noting that LLMs are getting better at reducing hallucinations and admitting uncertainty, per Artificial Analysis's Omniscience Index. I understand that LLMs are not in any way close to human-level knowledge level awareness, but at least it's getting better. Maybe not at the rate at which you predicted, in which case you'd be disappointed. But at least it's better.

https://artificialanalysis.ai/evaluations/omniscience

From what I understand, your promotion of agent development as the next step towards AGI aligns with what experts have been predicting. We'll have to see what the AI companies will do on that front.

Moving away from the original scope of this discussion, as much as I have concerns over the scope of images AI is allowed to generate, much opposition to genAI pretty much boils down to anti-fair use advocacy, which is just disappointing. Furthermore, the hypocrisy is often astounding. Mfs will tell someone who made a shitpost with AI to kill themselves and at the same time include a copyrighted character in the meme they use to issue said suicide encouragement.

Valid points on the nature of capitalism, obviously.
Sorry if I'm rambling, I'm just genuinely dismayed extraordinarily at the state of AI in 2025, especially on a social level. It feels like it often just gets sanded down to "Luddites bad" and "AI bad"
So real for that.
I have a particularly nasty itch whenever I see AI bros conflate Gen AI with ALL AI and thus get irrationally angry at people saying "I hate generative AI"
Personally I'm more just mad at toxic people and people who can't do nuance. This applies regardless of your position on AI. Engage in good faith, and I'll do the same.

Anyway, if only legacy media would also cover scientific and medical AI instead of these subjects being limited only to science publications. It would probably undermine the emotional highs and lows of "chatgpt weeee" and "omg genAI evil water energy art steal" though, and the media seems only interested in money/culture war shit in regards to this issue.
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Re: Are we in an AI bubble?

Post by Yuli Ban »

firestar464 wrote: Sat Nov 22, 2025 4:32 am Anyway, Yuli: Your statement that LLMs are not human-level/AGI are obviously correct; I don't think anyone's disputing that here. It's worth noting that your current reply seems to be at odds with the experience you described in your first, which suggested that LLMs were utterly unusable.

Yes, they aren't very world-model based. Maybe Google's attempts to make their AIs more compatible with robots will bear fruit; who knows. IDK. Don't know enough about this area.

It's also worth noting that LLMs are getting better at reducing hallucinations and admitting uncertainty, per Artificial Analysis's Omniscience Index. I understand that LLMs are not in any way close to human-level knowledge level awareness, but at least it's getting better. Maybe not at the rate at which you predicted, in which case you'd be disappointed. But at least it's better.

https://artificialanalysis.ai/evaluations/omniscience

From what I understand, your promotion of agent development as the next step towards AGI aligns with what experts have been predicting. We'll have to see what the AI companies will do on that front.

Moving away from the original scope of this discussion, as much as I have concerns over the scope of images AI is allowed to generate, much opposition to genAI pretty much boils down to anti-fair use advocacy, which is just disappointing. Furthermore, the hypocrisy is often astounding. Mfs will tell someone who made a shitpost with AI to kill themselves and at the same time include a copyrighted character in the meme they use to issue said suicide encouragement.

Valid points on the nature of capitalism, obviously.
Sorry if I'm rambling, I'm just genuinely dismayed extraordinarily at the state of AI in 2025, especially on a social level. It feels like it often just gets sanded down to "Luddites bad" and "AI bad"
So real for that.
I have a particularly nasty itch whenever I see AI bros conflate Gen AI with ALL AI and thus get irrationally angry at people saying "I hate generative AI"
Personally I'm more just mad at toxic people and people who can't do nuance. This applies regardless of your position on AI. Engage in good faith, and I'll do the same.

Anyway, if only legacy media would also cover scientific and medical AI instead of these subjects being limited only to science publications. It would probably undermine the emotional highs and lows of "chatgpt weeee" and "omg genAI evil water energy art steal" though, and the media seems only interested in money/culture war shit in regards to this issue.
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Re: Are we in an AI bubble?

Post by caltrek »

Best guess is that yes, we are in an AI bubble.

Economists that I respect are pointing out how investment in AI looks a lot like investment in real estate before that bubble burst, or investment in stock markets before some of the more dramatic crashes in history. To sum it up, it is a matter of money being borrowed in anticipation of enough profits to pay back such loans with interest. Where things go south is when profits in fact are not realized at the levels that were anticipated. Suddenly, the "loans" cannot be paid back, or the terms may need to be drastically renegotiated.

As was pointed out in the opening post, a lot depends on how dramatic AI and robotics can improve productivity. I have always been skeptical of promises of miracles in this regard. Long term, yes, AI and robotics may replace humans in the work force as we know it today because of their greater efficiency. Yet, part of calculations made by investors is not what AI and robotics will look like in the 22nd century. The time frames in which they operate are much more compressed. If it takes significantly longer than anticipated for a pay-off to occur, then a bursting of the investment bubble is probable.

Even if AI and robotics live up to expectations as to their technical benefits, there is also the question of how such benefits will be integrated into our economy. If their introduction causes a severe loss of employment and high returns for the rich and nothing for anybody else, we will have a basic economic problem. Supply will exceed demand, and businesses will be forced to adjust from their overproduction modes of operation.

A guaranteed basic income would help, but this goes against the grain of a society so heavily steeped in the work ethic that it is reluctant to give people "something for nothing." Idiot leaders like Trump may never understand the utility of such programs. Such leaders may be too obsessed with "free market" principles to understand the problem of overproduction. (Of course, for people like Trump government policy should only be a matter of socialism for the rich and free market economics for everybody else). In that environment, bursting bubbles will be more likely.

Another solution, more widespread ownership of the means of production, may also not be viable due to the jealousy of capitalist elites.
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Re: Are we in an AI bubble?

Post by caltrek »

When the AI Bubble Bursts, Working Families Will Pay the Price
By Saqib Bhatti
November 25, 2025

Introduction:
(Common Dreams) When the AI bubble pops, who’s going to be left holding the bag? Mainstream economists, tech oligarchs, and industry insiders are starting to sound the alarm: the current AI investment cycle is the most dangerous speculative surge in a generation. The question isn’t whether it will burst, but who will pay when it does. History tells us exactly where to look. When this bubble pops, low-income Black and Latine families will be left holding the bag—once again covering the costs of a boom that never included them.

In 2008, when the housing market crashed, it wasn’t the banks that paid the price. They were “too big to fail,” bailed out by the very taxpayers whose lives they ruined. Black and Latine families lost nearly half their collective wealth in a few short years. Entire neighborhoods were hollowed out by foreclosures, predatory refinancing, and austerity that gutted local city and municipal budgets.

We are dangerously close to repeating history. Big Tech is pouring trillions into inflating the AI bubble, venture capital poured nearly $200 billion into AI just this year, and data-center construction has exploded since 2022. Strip those investments out and the US economy would have grown just 0.1 percent in the first half of 2025. The Bureau of Labor Statistics recently revised last year’s job growth downward by more than 900,000 (the largest correction since the great recession), and holiday hiring is projected to be the lowest since 2009. In 2008, we bet America’s future on the strength of toxic mortgages and a handful of big banks holding their value. The American people lost, and now we’re going back to the table with tech companies convinced that a technology already underperforming expectations will someday soon deliver profits and prosperity.
Read more here: https://www.commondreams.org/opinion/w ... le-bursts
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Re: Are we in an AI bubble?

Post by caltrek »

'The Bubble is Ahead of Us': Hedge Fund Exec Says Investors Still Don't Get How Big AI Is
By Thibault Spirlet)
November 27, 2025

Introduction:
(Business Insider)
• Greg Jensen said the real AI bubble is still ahead as investors miss its scale.
• Bridgewater's co-CIO said AI is entering a 'dangerous' new phase and Wall Street still isn't ready.
• He said investors have 'no idea what's hitting them' as AI spending accelerates.
Investors who are convinced the AI boom has gone too far should brace for what's about to hit the market, Greg Jensen, co-chief investment officer at Bridgewater Associates, said in a recent interview

Jensen — who said he has spent more than a decade working with machine learning — said the market still hasn't grasped how transformative the technology will be or how much capital is about to flood into it.
Read more here: https://www.msn.com/en-us/money/saving ... e4&ei=144
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Re: Are we in an AI bubble?

Post by wjfox »

Bank of England warns of AI bubble risk

2 December 2025

The Bank of England has warned of a "sharp correction" in the value of major tech companies with growing fears of an artificial intelligence (AI) bubble.

It said share prices in the UK are close to the "most stretched" they have been since the 2008 global financial crisis, while equity valuations in the US are reminiscent of those before the dotcom bubble burst.

The central bank's financial stability report warned valuations are "particularly stretched" for companies focused on AI.

[...]

It cited industry figures forecasting spending on AI infrastructure could top $5tn (£3.8tn) and said much of this would be funded by AI firms themselves, but around half would come from outside sources, mostly through debt.

"Deeper links between AI firms and credit markets, and increasing interconnections between those firms, mean that, should an asset price correction occur, losses on lending could increase financial stability risks," it said.

https://www.bbc.co.uk/news/articles/cx2e0y3913jo
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Re: Are we in an AI bubble?

Post by caltrek »

Goldman Sachs' Top Strategist Says There is an AI Bubble — but Not Where Everyone Thinks
By Huileng Tan)
December 5, 2025

Introduction:
(Market Insider) Investors anxious about an AI-driven stock market bubble are focusing on the wrong place, Goldman Sachs' chief US equity strategist said.

David Kostin said on the firm's "Exchanges" podcast published on Thursday that the bubble isn't in the soaring share prices of Nvidia and other publicly traded AI giants.

Instead, it's in the private-market frenzy happening far from Wall Street's daily price discipline.

"I believe in the private markets, the availability of capital, the price is probably unsustainable, which one could take as a synonym for a bubble," said Kostin, who is retiring at the end of the year after 31 years at the firm.

Drawing on legendary investor George Soros's theory that rising prices often attract more capital, Kostin said private AI valuations are feeding on growth expectations rather than fundamentals.
Read more here: https://www.msn.com/en-us/money/saving ... 8&ei=148
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Re: Are we in an AI bubble?

Post by funkervogt »

Yes, but like the Dotcom Bubble, the bursting of this bubble will not destroy the sector in question: it will bring down many weaker and overleveraged firms and trigger a standard economic recession, but once the dust settles, strong growth will resume. I'm looking forward to buying tech stocks during the dip.
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Re: Are we in an AI bubble?

Post by Cyber_Rebel »

As someone who has a Pro subscription for ChatGPT and also very much have success with Gemini 3, I do find value within the current models especially when compared to two years ago. Deep Research, NoteBook LM to further expand on the data, saving and leveraging a lot of time with workflows, and learning with these models has been a pleasure for me. The Pulse one gets with the Pro subscription I've found to be pretty nice for getting my day started with relevant tailored feeds based on interest we've discussed, and I've been made aware of more than once of new opportunities and even valuable healthy considerations.

I really do believe we're within a point where the value really lies within the use cases specifically. For me like I hinted above, it's been pretty amazing at "vibe living" or helping to make much better more informed decisions to optimize a number of things. This requires a willingness to take the time to research the outputs, fact-check (sometimes cross referencing via another LLM) and see if similar trends emerge, and evaluate to make said informed decision, but I think it's worth it. It still really does depend on how much context one gives also and just how well, but I'd argue the same for people themselves.

I think the issue here is twofold. Yuli is talking about model capability, which is basically full-on AGI, and we're still a way off as agentic models need further progress for accuracy. The average person on the other hand doesn't have anywhere close to what I'm working with and might still believe we're within the GPT-4 era. As an aside: The amount of people who actually prefer 4o as a companion rather than the reasoning models also likely don't really note the limitations of transformer architecture, save for contextual memory helping to retain a sense of the personas they have curated over chats.

GPT 5 (basic .1 .2 etc) Pro are constantly proving they have the capability to aid novel proofs or discovery to advance science: https://openai.com/index/gpt-5-mathematical-discovery/

Comparing how things were 3 years ago when LLMs were still "new" to the public, I think we've come a long way already. The market correcting itself eventually won't mean the end of progress in the field in the least, just the end of smaller start-ups who unfortunately aren't "too big to fail."
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Re: Are we in an AI bubble?

Post by wjfox »

Cyber_Rebel wrote: Sun Dec 14, 2025 9:51 am
Comparing how things were 3 years ago when LLMs were still "new" to the public, I think we've come a long way already.

Yes. Thinking back to when I first used GPT-3.5 for web coding, I remember the outputs lasted about 30 seconds before cutting off. And they often contained errors.

These days, it can "think" for several minutes (and 20+ minutes in the case of Deep Research), handling multiple files (often with 1,000+ lines of code), faster and way more accurately. Since 5.0 in particular, it requires a lot less trial-and-error and tends to just output the correct answer I need. It now provides incredibly clear and helpful "before and after" guides, so I know precisely where to insert or remove code.

I wonder what the impact on the jobs market will be. I'd certainly be worried if I were a junior web designer/developer (a career I almost pursued before my current role).
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Re: Are we in an AI bubble?

Post by toromash »

There is no AI bubble, and it's not even comparable to the Dotcom bubble, as all the firms back then were highly unprofitable. This is not the case today, as all the magnificent 7 companies can withstand high setbacks. The valuation will change, but Google still has search, google cloud, YT and many more segments that have high margins, and are highly profitable. The same goes with Meta, Microsoft, Tesla, Apple (who is not a hyperscaler anyway). Meta knows that LLM might not amount to anything worthwhile, but if they are wrong they become the new Nokia or Intel. So they continue to be aggressive until it becomes a fact, that this endeavour is not viable. Then they will just reduce their capex and run their business pre 2022. All the hyperscalers will do this, and be just fine. So the risk primarily lies within the neo cloud providers, who gets all their revenue from LLM models and has a capital structure which contains high amounts of debt. They can do this now, because the demand is so high and will continue to be this to at least 2028. My prediction is that this will continue long after 2028 as models get integrated into valuable applications that create productivity gains in major parts of the labor market. This AI bubble discussion also forgets a key factor. They forecast the demand for current LLM's, forgetting the technological evolution that will create entire new models that are not related to LLM's and will require even more compute compared to today, increasing the demand further.

From a financial perspective, there might be an AI bubble. We will see as we move further into 2026. No one on the internet knows anything. They just replicate what the guy to the right or some clown on TV told them. It's just noise, so my advice is to not listen to that.As long as the narrative exists, markets will continue to go up, and I would argue that the true reason for the volatility these 2 past months are related to macroeconomic uncertainty, not an AI bubble. It was probably because of the Michael Burry announcing he shorted Palantir and Nvidia that everyone suddenliy panicked, and 99% had no clue why he actually shorted these stocks. What matters is the performance of the biggest semi conductur and Hyperscaler firms, which we see each quarter, and the guidance they give. They have not disappointed yet, so if you are waiting for a crash to buy in, then you will likely get disappointed. It's never a good idea to wait, always buy and DCA. If i waited for a crash, then my 300% gains in the last 1.5 years would be imaginary dust, and we can wait 1,2,3,10 years for an AI bubble to burst.

The LLM becoming AGI in the future was always a bad assumption. So if anyone expected this, then i can understand why they think there is an AI bubble. I already predicted that in the 2024 prediction that this would not occur, and if someone were to fail and go bankrupt in the next 5 years, my bet is on OpenAI.
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