“The AI bubble is reaching a tipping point”, says Sequoia Capital.
AI companies paid billions of dollars for top engineers, data centers, etc. Meanwhile, companies are running out of ‘free’ data to scrape online and facing lawsuits for the data they did scrape. Finally, the novelty of chatbots and image generators is wearing off for users, and fierce competition is leading to some product commoditisation.
No major AI lab is making a profit yet (while downstream GPU providers do profit). That’s not to say they won’t make money eventually from automation.
It looks somewhat like the run-up of the Dotcom bubble. Companies then too were awash in investments (propped up by low interest rates), but most lacked a viable business strategy. Once the bubble burst, non-viable internet companies got filtered out.
Yet today, companies like Google and Microsoft use the internet to dominate the US economy. Their core businesses became cash cows, now allowing CEOs to throw money at AI as long as a vote-adjusted majority of stakeholders buys the growth story. That marks one difference with the Dotcom bubble. Anyway, here’s the scenario:
How would your plans change if we saw an industry-wide crash?
Let’s say there is a brief window where:
Investments drop massively (eg. because the s-curve of innovation did flatten for generative AI, and further development cycles were needed to automate at a profit).
The public turns sour on generative AI (eg. because the fun factor wore off, and harms like disinformation, job insecurity, and pollution came to the surface).
Politicians are no longer interested in hearing the stories of AI tech CEOs and their lobbyists (eg. because political campaigns are not getting backed by the AI crowd).
Let’s say it’s the one big crash before major AI labs can break even for their parent companies (eg. because mass-manufacturing lowered hardware costs, real-time surveillance resolved the data bottleneck, and multi-domain-navigating robotics resolved inefficient learning).
Would you attempt any actions you would not otherwise have attempted?
If this happens, it could lead to a lot of AI researchers looking for jobs. Depending on the incentives at the time and the degree to which their skills are transferable, many of them could move into safety-related work.