The generative AI bubble might burst, sending the tech to an early deathbed before its prime: “Don’t believe the hype”

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Is generative AI just a fad? New numbers call into question the longevity of the new tech.

Generated with AI, Image of an AI robot and a lightbulb powered by Atomic energy
AI robot and a lightbulb (Image credit: Bing Chat)

What you need to know

  • The latest trends in tech indicate AI might not be performing as well as initially expected.
  • OpenAI is reportedly on the brink of bankruptcy, projecting $5 billion in losses within the next 12 months.
  • NVIDIA's value is slipping through the cracks due to the delayed shipment of its much-anticipated Blackwell chips.
  • Investors have also raised concerns that the vast resources invested in cutting-edge technology aren't reflected in profits.

Generative AI has been widely adopted across various sectors, including education, computing, medicine, music, and more. It undoubtedly redefines how everything works while rendering some professionals jobless. For instance, NVIDIA CEO Jensen Huang claims coding might be dead in the water as a plausible career option for the next generation with the rapid prevalence of AI.

Elon Musk (who's heavily invested in the tech) pointed out that we might be on the verge of the biggest technology breakthrough, though this benchmark might not be realized because of its high power demand. While AI has opened up the world to endless opportunities and untapped potential, its hype might be short-lived, with challenges abounding.

Aside from its high water and power demands, recent studies show that AI might be a fad and further claim that 30% of its projects will be abandoned after proof of concept. Similar sentiments are echoed in a recent Blood In The Machine newsletter, which points out critical issues that might potentially lead to "the beginning of the end of the generative AI boom."

From the Blood in the Machine newsletter analysis by Brian Merchant, who is also the Los Angeles Times' technology columnist:

"This is it. Generative AI, as a commercial tech phenomenon, has reached its apex. The hype is evaporating. The tech is too unreliable, too often. The vibes are terrible. The air is escaping from the bubble. To me, the question is more about whether the air will rush out all at once, sending the tech sector careening downward like a balloon that someone blew up, failed to tie off properly, and let go—or, more slowly, shrinking down to size in gradual sputters, while emitting embarrassing fart sounds, like a balloon being deliberately pinched around the opening by a smirking teenager."

Later, Merchant calls generative AI one big "meh" and remarks, "Enterprise AI was supposed to be the big moneymaker for generative AI firms, and now it's increasingly clear that it isn't adding much efficiency, at best, and is outright counterproductive at worst."

AI is clinging on by a thread

A robot patting another robot on the back (Image credit: Windows Central | Microsoft Designer)

Supporting what Merchant claims, Microsoft was recently placed on the spot by its investors for throwing large sums of money into AI-themed investors with little to show in profits. NVIDIA is arguably one of the biggest beneficiaries of the AI boom, as the demand for AI chips is at an all-time high. The AI hype pushed the chip brand to the top three most valuable companies in the world and, at some point, helped it surpass Microsoft and Apple to claim the coveted crown.

However, recent developments indicated that the chip manufacturer might have encountered some critical issues, including the delay of its long-awaited Blackwell chips, which will likely impact its market and stock performance. NVIDIA's stock has already taken a significant hit and dropped by 5%. However, CEO Jensen Huang claims the issue will be resolved soon.

Interestingly, market experts and analysts believe this is just the beginning. NVIDIA's value could decline significantly in the next few months. While we've been in the AI bubble for nearly two years, there's little to show except AI-powered tools like Copilot and ChatGPT.

Its real impact remains debatable, depending on which side of the expensive coin you're looking at. NVIDIA CEO believes we're well beyond AI-powered chatbots and could be on the brink of the next phase of AI with self-driving cars and humanoid robots.

The mass exodus of top executives from OpenAI is also highly concerning. OpenAI is arguably the face of AI, but CEO Sam Altman is one of the remaining few founding members of the ChatGPT maker. The latest exit featured researcher John Schulman, who joined rival firm Anthropic to focus on "AI alignment."

Aside from the management issues, billionaire Elon Musk recently refiled a lawsuit against OpenAI and Sam Altman for a stark betrayal of the firm's founding mission. The lawsuit also alleged involvement in racketeering. Musk says OpenAI used a "fake humanitarian mission" to get funds for AI advances. The billionaire says OpenAI's latest AI models constitute AGI, which breaches its current partnership agreement with Microsoft.

Elsewhere, OpenAI is reportedly on the verge of bankruptcy, with projections of making a $5 billion loss within the next 12 months. Analysts suggest that the firm might need additional funding to remain afloat. 

Ironically, ChatGPT had its best month yet on mobile and pulled $28 million in revenue in July, according to Appfigures. This builds up on the hype created by OpenAI's GPT-4o launch in May, contributing to the biggest spike in revenue and downloads.

Several reports indicated AI will eventually end humanity. An AI researcher shared p(doom) values of the probability of this happening, and it's alarmingly high, with a 99.9% probability. The researcher indicated the only way to reverse this outcome is by not building AI in the first place. I guess we will have to wait and see how everything pans out.

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Kevin Okemwa
Kevin Okemwa
Contributor

Kevin Okemwa is a seasoned tech journalist based in Nairobi, Kenya with lots of experience covering the latest trends and developments in the industry at Windows Central. With a passion for innovation and a keen eye for detail, he has written for leading publications such as OnMSFT, MakeUseOf, and Windows Report, providing insightful analysis and breaking news on everything revolving around the Microsoft ecosystem. You'll also catch him occasionally contributing at iMore about Apple and AI. While AFK and not busy following the ever-emerging trends in tech, you can find him exploring the world or listening to music.