Is it me or did the ‘AI bubble is bursting’ articles all come out of nowhere overnight? Not complaining it’s finally getting acknowledged but still
this post was submitted on 22 Aug 2025
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It's because GPT5 was such a disappointment.
Partly because they hyped it up beyond belief and partly because the results are actually bad. GPT3 to 4 was a big step up and with all the marketing people expected 4 to 5 to be just as big of a step. It turned out to be mostly a step sideways and in many aspects even a step back. Energy consumption is rumoured to be up, hallucinations are up and user experience is way down. At the same time all of the very public and high profile promises made are being broken and for a change people actually noticed.
The sentiment in the market was down for a while, but GPT5 release really kicked everything into high gear. Earlier people were disapointed "AI" didn't live up to the hype. Regular folks use it all the time as a replacement search engine, because Google had gotten so bad. But in businesses adoption was slow and where it was used the gains promised weren't seen. If the product was given away for free, people would use it, but even modestly paid subscriptions weren't taking off. But people thought: Hey, this is just the current level of tech, the next level is going to be so much better and improve a lot right? GPT5 proved that wasn't really true, so people lost faith fast.
LLM system are rapidly running into diminishing returns with larger models not yielding better results and sometimes even worse results. They also run into the issue they've poisoned the well. They used to train on data from the internet, but with the internet being flooded by output from older AI models, it's eating it's own shit. That's really bad for the performance of the newer models. Especially on things like coding and such, where it relies on code examples to produce new code. With Stackoverflow dying due to a lot of things, but AI being a big factor, there isn't as much of that as there used to be. Same for other stuff on the internet, once you kill the internet that great source of data is lost.
Now I don't think it's as worse (or good depending on your point of view) as some articles make it out to be. Many companies still see AI as the infinite money well the marketing claims it to be. A lot of people use it all the time, even though they've had negative experiences with it. But it's somewhat good to see some reality seeping in here and there.
I fully expect the shit to hit the fan and the bubble to burst in a catastrophic way. This will be bad, way worse than when the dotcom bubble burst. It's not going to be good for anyone. But better it burst soon than keep pumping it up further.
Well, GPT-5 was a disappointment because it didn't live up to expectations, but will it really cause the bubble to burst?
Because user frogbellyratbone_ gave a good explanation.
this isn’t me fanboying LLM corporations. pop pop pop. this article is fucking stupid though.
On Tuesday, tech stocks suffered a shock sell-off after a report from Massachusetts Institute of Technology (MIT) researchers warned that the vast majority of AI investments were yielding “zero return” for businesses.
no they didn’t. :// there was a small 1.5% “shock sell-off” (fucking lol) before rebounding. they’re only down 0.5% over the past 5-days.
even softbank, who the article focuses on, is up 36.5% (god damn) over the past month. that’s huge.
this week’s sell-off has yet to shift from a market correction to a market rout
omg stfuuuuuuuuuu. it’s -10% for a correction we aren’t even 0.5% of that.
GPT5 just proved what many of us in the software industry on the technical side have been saying since the beginning.
LLMs are not AI. And they are only as useful as the information they are trained on, and with the industry using all of the internet to train the majority of them, they have tons of false information. And everything an LLM says is based on s confidence level that it's correct, but those confidence levels are configured so low that it's often way off. Plus people are used to computers giving specific, correct answers, but LLMs are all about small talk and making things up to fill time because that's what they're trained on. People need to learn these aren't AI and everything they say needs to be taken with that in mind. Double and triple check it before believing it. But since we often don't even do that with humans, thus the whole anti-vax thing for example, it's even harder for people to want to do that for something that was explicitly marketed as preventing them from needing to do the research.
So now that those not profiting directly from AI are seeing that it's probably never going to get better as promised, they're losing confidence. But it will stick around for s while. The energy industry is powerful and is lobbying hard for it since it's the first time in a while our energy demands have spiked so high. And with the mechanisms to monitor climate change being shut down or explicitly destroyed in the US, and conservatives convinced that the natural disasters are just short term, dirty fuel demand is back, more than ever. So they have a ton of incentive to keep it alive ss well as the companies making it.
Sorry, good write-up, but what's wrong with your S-key?
Lol, I switched to a keyboard on my phone with an ñ for writing in Spanish as well as English and the s key is just a little further to the left than on the standard QWERTY, so I keep hitting s instead of a. And for some reason the spell check and auto-correct seem not to be catching it.
Feels like most are all about the MIT report, but yeah seems like articles are popping up everywhere.
The news of the "AI bubble bursting" make me thing of Hunter S. Thompson (as quoted in the movie "Fear and Loathing in Las Vegas):
There was madness in any direction, at any hour. You could strike sparks anywhere. There was a fantastic universal sense that whatever we were doing was right, that we were winning. And that, I think, was the handle - that sense of inevitable victory over the forces of Old and Evil. Not in any mean or military sense; we didn’t need that. Our energy would simply prevail. There was no point in fighting - on our side or theirs. We had all the momentum; we were riding the crest of a high and beautiful wave. So now, less than five years later, you can go up on a steep hill in Las Vegas and look West, and with the right kind of eyes you can almost see the high-water mark - that place where the wave finally broke and rolled back.
Open AI is like the Manson family?
It's more that the fall of the hopeful idealism and ambition, the earnest naive optimism for the future of tech that was originally driving Silicon Valley the late 70s / early 80s into the monstrous thing it's become in the 21st century; parallels the same HST saw happening at the end of the San Francisco 60s' acid wave when the hippies burnt out and the tweakers took over.
"We are all wired into a survival trip now. No more of the speed that fueled that 60's. That was the fatal flaw in Tim Leary's trip. He crashed around America selling "consciousness expansion" without ever giving a thought to the grim meat-hook realities that were lying in wait for all the people who took him seriously... All those pathetically eager acid freaks who thought they could buy Peace and Understanding for three bucks a hit. But their loss and failure is ours too. What Leary took down with him was the central illusion of a whole life-style that he helped create... a generation of permanent cripples, failed seekers, who never understood the essential old-mystic fallacy of the Acid Culture: the desperate assumption that somebody... or at least some force - is tending the light at the end of the tunnel."
Someone throw a fucking cactus at this bubble already
Less taking, more bursting.
Let's see, that's like four or five articles with basically the same observation this week? That I've seen or read about. There are probably others. The clock is ticking.
For a good ongoing rundown of what a shit hype bubble the industry is in, see the newsletter and podcast of Ed Zitron.
People keep replying to recommendations for Zitron's work asking for links or thanking people who post them. Can people not search "Ed Zitron newsletter," or "Ed Zitron podcast"? I'm kinda surprised how much this happens (I promote his work on every story about AI going to shit because he does a great job of breaking it all down).
Can people not search “Ed Zitron newsletter,” or “Ed Zitron podcast”? I’m kinda surprised how much this happens
Would it kill you to add the links yourself?
There you go:
I frequently add links to a book that I oft recommend, a torrent exposing USA fascists, and a podcast about the housing crisis. It wouldn't kill me to do two more, but there's only so much time I'm willing to spend.