When this article are claiming both sides of the debate, I believe only one of them are real (the ones hyping up the technology). While there are people like me who are pessimistic about the technology, we are not in any position of power, and our opinion on the matter is basically a side noise. I think a much more common (among people with any say in the future of this technology) is the believe that this technology is not yet at a point which warrants all this investment. There were people who said that about the internet in 1999, and they were proven 100% correct in the months that followed.
1. the opening premise comparing AI to dial-up internet; basically everyone knew the internet would be revolutionary long before 1995. Being able to talk to people halfway across the world on a BBS? Sending a message to your family on the other side of the country and them receiving it instantly? Yeah, it was pretty obvious this was transformative. The Krugman quote is an extreme, notable outlier, and it gets thrown out around literally every new technology, from blockchain to VR headsets to 3DTVs, so just like, don't use it please.
2. the closing thesis of
> Consider the restaurant owner from earlier who uses AI to create custom inventory software that is useful only for them. They won’t call themselves a software engineer.
The idea that restaurant owners will be writing inventory software might make sense if the only challenge of creating custom inventory software, or any custom software, was writing the code... but it isn't. Software projects don't fail because people didn't write enough code.
I was only able to do this because I had some prior programming experience but I would imagine that if AI coding tools get a bit better they would enable a larger cohort of people to build a personal tool like I did.
That sounds pretty similar to long-distance phone calls? (which I'm sure was transformative in its own way, but not on nearly the same scale as the internet)
Do we actually know how transformative the general population of 1995 thought the internet would or wouldn't be?
As soon as the internet arrived, a bit late for us (I'd say 1999 maybe) due to the minitel's "good enough" nature, it just became instantly obvious, everyone wanted it. The general population was raving mad to get an email address, I never heard anyone criticize the internet like I criticize the fake "AI" stuff now.
Because some notable people dismissed things that wound up having profound effect on the world, it does not mean that everything dismissed will have a profound effect.
We could just as easily be "peak Laserdisc" as "dial-up internet".
There's another presumably unintended aspect of the comparison that seems worth considering. The Internet in 2025 is certainly vastly more successful and impactful than the Internet in the mid-90s. But dial-up itself as a technology for accessing the Internet was as much of a dead-end as Laserdisc was for watching movies at home.
Whether or not AI has a similar trajectory as the Internet is separate from the question of whether the current implementation has an actual future. It seems reasonable to me that in the future we're enjoying the benefits of AI while laughing thinking back to the 2025 approach of just throwing more GPUs at the problem in the same way we look back now and get a chuckle out of the idea of "shotgun modems" as the future.
> 1. Economic strain (investment as a share of GDP)
> 2. Industry strain (capex to revenue ratios)
> 3. Revenue growth trajectories (doubling time)
> 4. Valuation heat (price-to-earnings multiples)
> 5. Funding quality (the resilience of capital sources)
> His analysis shows that AI remains in a demand-led boom rather than a bubble, but if two of the five gauges head into red, we will be in bubble territory.
This seems like a more quantitative approach than most of "the sky is falling", "bubble time!", "circular money!" etc analyses commonly found on HN and in the news. Are there other worthwhile macro-economic indicators to look at?
It's fascinating how challenging it is meaningfully compare current recent events to prior economic cycles such as the y2k tech bubble. It seems like it should be easy but AFAICT it barely even rhymes.
Stockmarket capitalisation as a percentage of GDP AKA the Buffett indicator.
https://www.longtermtrends.net/market-cap-to-gdp-the-buffett...
Good luck, folks.
I'm sure there are other factors that make this metric not great for comparisons with other time periods, e.g.:
- rates
- accounting differences
That is the real dial-up thinking.
Couldn't AI like be their custom inventory software?
Codex and Claud Code should not even exist.
Absolutely not. It's inherently a software with a non-zero amount of probability in every operation. You'd have a similar experience asking an intern to remember your inventory.
Like I enjoy Copilot as a research tool right but at the same time, ANYTHING that involves delving into our chat history is often wrong. I own three vehicles, for example, and it cannot for it's very life remember the year, make and model of them. Like they're there, but they're constantly getting switched around in the buffer. And once I started positing questions about friend's vehicles that only got worse.
Really. Tool use is a big deal for humans, and it's just as big a deal for machines.
A single image generally took nothing like a minute. Most people had moved to 28.8K modems that would deliver an acceptable large image in 10-20 seconds. Mind you, the full-screen resolution was typically 800x600 and color was an 8-bit palette… so much less data to move.
Moreover, thanks to “progressive jpeg”, you got to see the full picture in blocky form within a second or two.
And of course, with pages was less busy and tracking cookies still a thing of the future, you could get enough of a news site up to start reading in less time that it can take today.
One final irk is that it’s little overdone to claim that “For the first time in history, you can exchange letters with someone across the world in seconds”. Telex had been around for decades, and faxes, taking 10-20 seconds per page were already commonplace.
I look forward to the "personal computing" period, with small models distributed everywhere...
Like 50% of internet users are already interacting with one of these daily.
You usually only change your habit when something is substantially better.
I don't know how free versions are going to be smaller, run on commodity hardware, take up trivial space and ram etc, AND be substantially better
If you are using an Apple product chances are you are already using self-hosted models for things like writing tools and don't even know it.
No, you usually only change your habit when the tools you are already using are changed without consulting you, and the statistics are then used to lie.
Like the web, which worked out great?
Our Internet is largely centralized platforms. Built on technology controlled by trillion dollar titans.
Google somehow got the lion share of browser usage and is now dictating the direction of web tech, including the removal of adblock. The URL bar defaults to Google search, where the top results are paid ads.
Your typical everyday person uses their default, locked down iPhone or Android to consume Google or Apple platform products. They then communicate with their friends over Meta platforms, Reddit, or Discord.
The decentralized web could never outrun money. It's difficult to out-engineer hundreds of thousands of the most talented, most highly paid engineers that are working to create these silos.
Fr tho, no ads - I'm not making money off them, I've got no invite code for you, I'm a human - I just don't get it. I've probably told 500 people about Brave, I don't know any that ever tried it.
I don't ever know what to say. You're not wrong, as long as you never try to do something else.
Or rather, they'd block Brave.
Assuming consumers even bother to set up a coop in their living room...
Data General and Unisys did not create PCs - small disrupters did that. These startups were happy to sell eggs.
Because someone else can sell the goose and take your market.
Apple is best aligned to be the disruptor. But I wouldn’t underestimate the Chinese government dumping top-tier open-source models on the internet to take our tech companies down a notch or ten.
It's very risky play, and if it doesn't work it leaves China in a much worse place than before, so ideally you don't make the play unless you're already facing some big downside, sort of as a "hail Mary" move. At this point I'm sure they're assuming Trump is glad handing them while preparing for military action, they might even view invasion of Taiwan as defensive if they think military action could be imminent anyhow.
And you know we'd be potting their transport ships, et cetera, from a distance the whole time, all to terrific fanfare. The Taiwan Strait would become the new training ground for naval drones, with the targets being almost exclusively Chinese.
If Apple does finally come up with a fully on-device AI model that is actually useful, what makes you think they won't gate it behind a $20/mo subscription like they do for everything else?
Non sequitur.
If a market is being ripped off by subscription, there is opportunity in selling the asset. Vice versa: if the asset sellers are ripping off the market, there is opportunity to turn it into a subscription. Business models tend to oscillate between these two for a variety of reasons. Nothing there suggets one mode is infinitely yielding.
> If Apple does finally come up with a fully on-device AI model that is actually useful, what makes you think they won't gate it behind a $20/mo subscription like they do for everything else?
If they can, someone else can, too. They can make plenty of money selling it straight.
Selling eggs is better how?
Just a bunch of billionaires jockeying for not being poor.
One could argue that this period was just a brief fluke. Personal computers really took off only in the 1990s, web 2.0 happened in the mid-2000s. Now, for the average person, 95%+ of screen time boils down to using the computer as a dumb terminal to access centralized services "in the cloud".
And AI just further normalizes the need for connectivity; cloud models are likely to improve faster than local models, for both technical and business reasons. They've got the premium-subscriptions model down. I shudder to think what happens when OpenAI begins hiring/subsuming-the-knowledge-of "revenue optimization analysts" from the AAA gaming world as a way to boost revenue.
But hey, at least you still need humans, at some level, if your paperclip optimizer is told to find ways to get humans to spend money on "a sense of pride and accomplishment." [0]
We do not live in a utopia.
[0] https://www.guinnessworldrecords.com/world-records/503152-mo... - https://www.reddit.com/r/StarWarsBattlefront/comments/7cff0b...
The thing we do need to be careful about is regulatory capture. We could very well end up with nothing but monolithic centralized systems simply because it's made illegal to distribute, use, and share open models. They hinted quite strongly that they wanted to do this with deepseek.
There may even be a case to be made that at some point in the future, small local models will outperform monoliths - if distributed training becomes cheap enough, or if we find an alternative to backprop that allows models to learn as they infer (like a more developed forward-forward or something like it), we may see models that do better simply because they aren't a large centralized organism behind a walled garden. I'll grant that this is a fairly polyanna take and represents the best possible outcome but it's not outlandishly fantastic - and there is good reason to believe that any system based on a robust decentralized architecture would be more resilient to problems like platform enshittification and overdeveloped censorship.
At the end of the day, it's not important what the 'average' user is doing, so long as there are enough non-average users pushing the ball forward on the important stuff.
It only has to be good enough to do what we want. In the extreme, maybe inference becomes cheap enough that we ask “why do I have to wake up the laptop’s antenna?”
You could say the same about all self-hosted software, teams with billions of dollars to produce and host SaaS will always have an advantage over smaller, local operations.
Most open source development happens on GitHub.
You'd think non-average developers would have noticed their code is now hosted by Microsoft, not the FSF. But perhaps not.
The AI end game is likely some kind of post-Cambrian, post-capitalist soup of evolving distributed compute.
But at the moment there's no conceivable way for local and/or distributed systems to have better performance and more intelligence.
Local computing has latency, bandwidth, and speed/memory limits, and general distributed computing isn't even a thing.
Also, is percentage of screentime the relevant metric? We moved TV consumption to the PC, does that take away from PCs?
Many apps moved to the web but that's basically just streamed code to be run in a local VM. Is that a dumb terminal? It's not exactly local compute independent...
Nearly entirety of the use cases of computers today don't involve running things on a 'personal computer' in any way.
In fact these days, every one kind of agrees as little as hosting a spreadsheet on your computer is a bad idea. Cloud, where everything is backed up is the way to go.
PC was never 'no web'. No one actually 'counted every screw in their garage' as the PC killer app. It was always the web.
This whole idea that you can connect lots of cheap low capacity boxes and drive down compute costs is already going away.
In time people will go back to thinking compute as a variable of time taken to finish processing. That's the paradigm in the cloud compute world- you are billed for the TIME you use the box. Eventually people will just want to use something bigger that gets things done faster, hence you don't have to rent them for long.
Would you classify eg gmail as 'content streaming'?
Our personal devices are far from thin clients.
The text content of a weather app is trivial compared to the UI.
Same with many web pages.
Desktop apps use local compute, but that's more a limitation of latency and network bandwidth than any fundamental need to keep things local.
Security and privacy also matter to some people. But not to most.
I think it depends on if you see the browser for content or as a runtime environment.
Maybe it depends on the application architecture...? I.e., a compute-heavy WASM SPA at one end vs a server-rendered website.
Or is it an objective measure?
I had always hoped we'd do more locally on-device (and with native apps, not running 100 instances of chromium for various electron apps). But, it's hard to extract rent that way I suppose.
I access websites on a 64gb, 16 core device. I deploy them to a 16gb, 4 core server.
Or even physical things like mattresses, according to discussions around the recent AWS issues.
Because if there’s one thing worse than governments having nuclear weapons, it’s everyone having them.
It would be chaos. And with physical drones and robots coming, it woukd be even worse. Think “shitcoins and memecoins” but unlike those, you don’t just lose the money you put in and you can’t opt out. They’d affect everyone, and you can never escape the chaos ever again. They’d be posting around the whole Internet (including here, YouTube deepfakes, extortion, annoyance, constantly trying to rewrite history, get published, reputational destruction at scale etc etc), and constant armies of bots fighting. A dark forest.
And if AI can pay for its own propagation via decentralized hosting and inference, then the chance of a runaway advanced persistent threat compounds. It just takes a few bad apples, or even practical jokers, to unleash crazy stuff. And it will never be shut down, just build and build like some kind of kessler syndrome. And I’m talking about with just CURRENT AI agent and drone technology.
1. Most people don't have machines that can run even midsized local models well
2. The local models are nearly as good as the frontier models for a lot of use cases
3. There are technical hurdles to running local models that will block 99% of people. Even if the steps are: download LM Studio and download a model
Maybe local models will get so good that they cover 99% of normal user use cases and it'll be like using your phone/computer to edit a photo. But you'll still need something to make it automatic enough that regular people use it by default.
That said, anyone reading this is almost certainly technical enough to run a local model. I would highly recommend trying some. Very neat to know it's entirely run from your machine and seeing what it can do. LM Studio is the most brainless way to dip your toes in.
I'm no expert but I can't help feeling there's lots of things they could be doing vastly better in this regard - presumably there is lots to do and they will get around to it.
true for every marketing ever
Currently, investment into AI exceeds the dot-com bubble by a factor of 17. Even in the dot-com era, the early internet was already changing media and commerce in fundamental ways. November is the three-year anniversary of ChatGPT. How much economic value are they actually creating? How many people are purchasing AI-generated goods? How much are people paying for AI-provided services? The value created here would have to exceed what the internet was generating in 2000 by a factor of 17 (which seems excessive to me) to even reach parity with the dot-com bubble.
"But think where it'll be in 5 years"—sure, and let's extrapolate that based on where it is now compared to where it was 3 years ago. New models present diminishing returns. 3.5 was groudbreaking; 4 was a big step forward; 5 is incremental. I won't deny that LLMs are useful, and they are certainly much more productized now than they were 3 years ago. But the magnitude of our collective investment in AI requires that a huge watershed moment be just around the corner, and that makes no sense. The watershed moment was 3 years ago. The first LLMs created a huge amount of potential. Now we're realizing those gains, and we're seeing some real value, but things are also tapering off.
Surely we will have another big breakthrough some day—a further era of AI which brings us closer to something like AGI—but there's just no reason to assume AGI will crop up in 2027, and nothing less that that can produce the ROI that such enormous valuations will eventually, inexorably, demand.
Do you think Sam Altman, Jeff Bezos, and Mark Zuckerberg are all wrong saying that we’re in a bubble? Do they “lack imagination?”
Also? What do I need imagination for, isn’t that what AI does now?
The key variable for me in this house of cards is how long folks will wait before they need to see their money again, and whether these companies will go in the right direction long enough given these valuations to get to AGI. Not guaranteed and in the meantime society will need to play ball (also not a guarantee)
That's not how I remember it (but I was just a kid so I might be misremembering?)
As I remember (and what I gather from media from the era) late 80s/early 90s were hyper optimistic about tech. So much so that I distinctly remember a ¿german? TV show when I was a kid where they had what amounts to modern smartphones, and we all assumed that was right around the corner. If anything, it took too damn long.
Were adults outside my household not as optimistic about tech progress?
https://bsky.app/profile/ruv.is/post/3liyszqszds22
Note that this is the state TV broadcasting this in their main news program. The most popular daily show in Iceland.
The Claw allows a garbage truck to be crewed by one man where it would have needed two or three before, and to collect garbage much faster than when the bins were emptied by hand. We don't know what the economics of such automation of (physical) garbage collection portend in the long term, but what we do know is that sanitation workers are being put out of work. "Just upskill," you might say, but until Claw-equipped trucks started appearing on the streets there was no need to upskill, and now that they're here the displaced sanitation workers may be in jeopardy of being unable to afford to feed their families, let alone find and train in some new marketable skill.
So no, we're in the The Claw era of AI, when business finds a new way to funge labor with capital, devaluing certain kinds of labor to zero with no way out for those who traded in such labor. The long-term implications of this development are unclear, but the short-term ones are: more money for the owner class, and some people are out on their ass without a safety net because this is Goddamn America and we don't brook that sort of commie nonsense here.
The waste collection companies in my area don't use them because it's rural and the bins aren't standardized. The side loaders don't work for all use cases of garbage trucks.
[0] https://en.wikipedia.org/wiki/Garbage_truck
>In 1969, the city of Scottsdale, Arizona introduced the world's first automated side loader. The new truck could collect 300 gallon containers in 30 second cycles, without the driver exiting the cab
Because we all know how essential the internet is nowadays.
We’re at the end of Moore’s Law, it’s pretty reasonable to assume. 3nm M5 chips means there are—what—a few hundred silicon atoms per transistor? We’re an order of magnitude away from .2 nm which is the diameter of a single silicon atom.
My point is, 30 years have passed since dial up. That’s a lot of time to have exponentially increasing returns.
There’s a lot of implicit assumption that “it’s just possible” to have a Moore’s Law for the very concept of intelligence. I think that’s kinda silly.
And not just that, they come out with an iPhone that has _no_ camera as an attempt to really distance themselves from all the negative press tech (software and internet in particular) has at the moment.
The Apple engineers, with their top level unfettered access to the best Apple AI - they'll convince shareholders to fund it forever, even if normal people never catch on.
If you make the context small enough, we're back at /api/create /api/read /api/update /api/delete; or, if you're old-school, a basic function
The real parallel is Canal Mania — Britain’s late-18th-century frenzy to dig waterways everywhere. Investors thought canals were the future of transport. They were, but only briefly.
Today’s AI runs on GPUs — chips built for rendering video games, not thinking machines. Adapting them for AI is about as sensible as adapting a boat to travel across land. Sure, it moves — but not quickly, not cheaply, and certainly not far.
It works for now, but the economics are brutal. Each new model devours exponentially more power, silicon, and capital. It just doesn't scale.
The real revolution will come with new, hardware built for the job (that hasn't been invented yet) — thousands of times faster and more efficient. When that happens, today’s GPU farms will look like quaint relics of an awkward, transitional age: grand, expensive, and obsolete almost overnight.
Think 3D printers versus injection molds: you prototype with flexibility, then mass-produce with purpose-built tooling. We've seen this pattern before too. CPUs didn't vanish when GPUs arrived for graphics. The canal analogy assumes wholesale replacement. Reality is likely more boring: specialization emerges and flexibility survives.
>We’re in the 1950s equivalent of the internet boom — dial-up modems exist, but YouTube doesn’t.
Mass production of telephone line modems in the United States began as part of the SAGE air-defense system in 1958, connecting terminals at various airbases, radar sites, and command-and-control centers to the SAGE director centers scattered around the United States and Canada.
Shortly afterwards in 1959, the technology in the SAGE modems was made available commercially as the Bell 101, which provided 110 bit/s speeds. Bell called this and several other early modems "datasets".
What is clear, is that we have strapped a rocket to our asses, fueled with cash and speculation. The rocket is going so fast we don't know where we're going to land, or if we'll land softly, or in a very large crater. The past few decades have examples of craters. Where there are potential profits, there are people who don't mind crashing the economy to get them.
I don't understand why we're allowing this rocket to begin with. Why do we need to be moving this quickly and dangerously? Why do we need to spend trillions of dollars overnight? Why do we need to invest half the fucking stock market on this brand new technology as fast as we can? Why can't we develop it in a way that isn't insanely fast and dangerous? Or are we incapable of decisions not based on greed and FOMO?
They earn so much from oil and are so keenly aware this will stop, they'd rather spend a trillion on a failure, than keep that cash rotting away with no future investment.
No project, no country, can swallow the Saudi oil money like Sam Altman can. So, they're building enormous data centers with custom nuclear plants and call that Stargate to syphon that dumb money in. It's the whole business model of Softbank: find a founder whose hubris is as big as Saudi stupidity.
It's falling into the trap of assuming we're going to get to the science fiction abilities of AI with the current software architectures, and within a few years, as long as enough money is thrown at the problem.
All I can say for certain is that all the previous financial instruments that have been jumped on to drive economic growth have eventually crashed. The dot com bubble, credit instruments leading to the global financial crisis, the crypto boom, the current housing markets.
The current investments around AI that we're all agog at are just another large scale instrument for wealth generation. It's not about the technology. Just like VR and BioTech wasn't about the technology.
That isn't to say the technology outcomes aren't useful and amazing, they are just independant of the money. Yes, there are Trillions (a number so large I can't quite comprehend it to be honest) being focused into AI. No, that doesn't mean we will get incomprehensible advancements out the other end.
AGI isn't happening this round folks. Can hallucinations even be solved this round? Trillions of dollars to stop computers lying to us. Most people where I work don't even realise hallucinations are a thing. How about a Trillion dollars so Karen or John stop dismissing different viewpoints because a chat bot says something contradictory, and actually listen? Now that would be worth a Trillion dollars.
Imagine a world where people could listen to others outside of their bubble. Instead they're being given tools that re-inforce the bubble.
I mean, sort of, but the fiber optics in the ground have been upgraded several by orders of magnitude of its original capacity by replacing the transceivers on either end. And the fiber itself has lasted and will continue to last for decades.
Neither of those properties is true of the current datacenter/GPU boom. The datacenter buildings may last a few decades but the computers and GPUs inside will not and they cannot be easily amplified in their value as the fiber in the ground was.
I pay for chatgpt plus and github copilot.
I'm curious what kind of problem your "brain cant wrap around", but the AI could.
This is clearly false, as is obvious to anyone who has done any software engineering. The big corps are in no shortage of capital and could just add more engineers if this were true. But we know what happens when you add more people to a project.
Rather, there are other more fundamental constraints, like the complexity of software and our ability to grasp and manipulate it. I think the argument would have been better if it focused on that. It'd be more based.
Which is a long-winded way of saying that I agree with others here that this article is full of hubris. I hope you got those chicks on Substack clapping for you, at least. Fast lane to getting laid for sure.
I’m not sure that’s a certainty.
arcticbull•6h ago
When the railroad bubble popped we had railroads. Metal and sticks, and probably more importantly, rights-of-way.
If this is a bubble, and it pops, basically all the money will have been spent on Nvidia GPUs that depreciate to 0 over 4 years. All this GPU spending will need to be done again, every 4 years.
Hopefully we at least get some nuclear power plants out of this.
ares623•6h ago
troupo•6h ago
It takes China 5 years now, but they've been ramping up for more than 20 years.
simonw•6h ago
I'm still a fan of the railroad comparisons though for a few additional reasons:
1. The environmental impact of the railroad buildout was almost incomprehensibly large (though back in the 1800s people weren't really thinking about that at all.)
2. A lot of people lost their shirts investing in railroads! There were several bubbly crashes. A huge amount of money was thrown away.
3. There was plenty of wasted effort too. It was common for competing railroads to build out rails that served the same route within miles of each other. One of them might go bust and that infrastructure would be wasted.
robinhoode•6h ago
I think we may not upgrade every 4 years, but instead upgrade when the AI models are not meeting our needs AND we have the funding & political will to do the upgrade.
Perhaps the singularity is just a sigmoid with the top of the curve being the level of capex the economy can withstand.
arcticbull•2h ago
Trains are closer to $50-100,000 per mile per year.
If there's no money for the work it's a prioritization decision.
rhubarbtree•6h ago
schwarzrules•6h ago
I agree the depreciation schedule always seems like a real risk to the whole financial assumptions these companies/investors make, but a question I've wondered: - Will there be an unexpected opportunity when all these "useless" GPUs are put out to pasture? It just seems like saying a factory will be useless because nobody wants to buy an IBM mainframe, but an innovative company can repurpose a non-zero part of that infrastructure for another use case.
paxys•6h ago
Heck if nothing else all the new capacity being created today may translate to ~zero cost storage, CPU/GPU compute and networking available to startups in the future if the bubble bursts, and that itself may lead to a new software revolution. Just think of how many good ideas are held back today because deploying them at scale is too expensive.
bryanlarsen•5h ago
Note that these are just power purchase agreements. It's not nothing, but it's a long ways away from building nuclear.
amluto•5h ago
FridgeSeal•5h ago
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vjvjvjvjghv•4h ago