I vividly remember sitting there for literally hours talking to a computer on launch day, it was a very short night. This feeling of living in the future has not left me since, it's got quieter, but it's still there. It's still magic after those three years, perhaps even more so. It wasn't supposed to work this well for decades! and yet.
3 things we know about the AI revolution in 2025:
- LLMs are amazing, but they have reached a plateau. AGI is not within reach.
- LLM investment has sacrificed many hundreds of billions of dollars, much of it from the world's pension funds.
- There is no credible path to a high-margin LLM product. Margins will be razor-thin positive at best once the free trial of the century starts to run out of steam.
This all adds up to a rather nasty crunch.
The thing about winter, though, is that it's eventually followed by another summer.
I personally believe contemporary AI is over-hyped, but I cannot say with confidence that it is going to lead to a similar winter as the last time. It seems like today's products satisfy enough users to remain as a significant area, even if it doesn't greatly expand...
The only way I could see it fizzling as a product category is if it turns out it is not economically feasible to operate a sustainable service. Will users pay a fair price to keep the LLM datacenters running, without speculative investment subsidies?
The other aspect of the winter is government investment, rather than commercial. What could the next cycle of academic AI research look like? E.g. exploration that needs to happen in grant-funded university labs instead of venture-funded companies?
The federal funding picture seems unclear, but that's true across the board right now for reasons that have nothing to do with AI per se.
But the consumer's is not the important perspective for the AI hype cycle. It's the investors' perspective. I'm going to guess that well over a trillion dollars has gone into "AI", including the major labs and all the little "agents for XYZ" startups popping up every day. From the investors' perspective, that better pay off several times over in profit, not revenue, in the next few years. Prices will go up, but competition is fierce and nobody will be able to command a high margin. How are they going to make trillions in profit with razor thin margins?
This will make the very mention of "AI" toxic for most investors sooner than later.
I'm not so sure. I agree about the exceptionally off the charts expectations rivaling only the dotcom bubble, but with the current rate of progress I'd expect AI to be pervasive enough to disappear from investor relationship materials not because it's a buzzword, but because it's assumed to be incorporated just like companies don't mention that they're running Linux servers; companies saying that they're doing stuff without AI will be something to watch for.
> - LLMs are amazing, but they have reached a plateau. AGI is not within reach.
Source/citation?
It's not about how good or useful or potentially lucrative the technology is. Every previous catalyst for an AI winter has eventually become pervasive, changed the world, and made some people a lot of money. Every single one. And I do mean pervasive. If you could poof just one of them out of existence, my cell phone would become noticeably less useful.
What it's really about is how hype cycles interact with funding for basic research.
you should look at benchmarks such as ARC which went from "needs 10 years, currently at 0%" to almost solved within the least year. Also there is a revolution happening in math which the layman might be missing.