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

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

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What you need to know

What you need to know

Generative AIhas been widely adopted across various sectors, including education, computing, medicine, music, and more. It undoubtedly redefines how everything works whilerendering some professionals jobless. For instance, NVIDIA CEO Jensen Huang claimscoding might be dead in the water as a plausible career optionfor 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 ofthe biggest technology breakthrough, though this benchmark might not be realized because of itshigh 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 thatAI might be a fadand further claim that30% of its projects will be abandoned after proof of concept. Similar sentiments are echoed in a recentBlood 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 theBlood in the Machinenewsletter 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 isescaping 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

AI is clinging on by a thread

Supporting what Merchant claims, Microsoft was recently placed on the spot by its investors forthrowing 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.

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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 likeCopilotandChatGPT.

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 ofthe next phase of AIwith self-driving cars and humanoid robots.

Themass exodus of top executives from OpenAIis 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, whojoined rival firm Anthropic to focus on “AI alignment.”

Aside from the management issues, billionaire Elon Musk recentlyrefiled a lawsuit against OpenAI and Sam Altmanfor 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 toAppfigures. This builds up on the hype created byOpenAI’s GPT-4o launch in May, contributing to the biggest spikein revenue and downloads.

Several reports indicatedAI will eventually end humanity. An AI researcher shared p(doom) values of the probability of this happening, and it’salarmingly 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.

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.