philip lelyveld The world of entertainment technology

Say farewell to the AI bubble, and get ready for the crash

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The cheerless rollout of GPT-5 could bring the day of reckoning closer. “AI companies are really buoying the American economy right now, and it’s looking very bubble-shaped,” Hanna told me. 

The rollout was so disappointing that it shined a spotlight on the degree that the whole AI industry has been dependent on hype. ...

One problem underscored by GPT-5’s underwhelming rollout is that it exploded one of the most cherished principles of the AI world, which is that “scaling up” — endowing the technology with more computing power and more data — would bring the grail of artificial general intelligence, or AGI, ever closer to reality. 

That’s the principle undergirding the AI industry’s vast expenditures on data centers and high-performance chips. ...

As Bender and Hanna point out in their book, AI promoters have kept investors and followers enthralled by relying on a vague public understanding of the term “intelligence.” ...

“What I had not realized,” Weizenbaum wrote in 1976, “is that extremely short exposures to a relatively simple computer program could induce powerful delusional thinking in quite normal people.” ...

Some economists are dashing cold water on predictions of economic gains more generally.  ...

“Claims around consciousness and sentience are a tactic to sell you on AI,” Bender and Hanna write. So, too, is the talk about the billions, or trillions, to be made in AI. As with any technology, the profits will go to a small cadre, while the rest of us pay the price ... unless we gain a much clearer perception of what AI is, and more importantly, what it isn’t.

See the full story here: https://www.latimes.com/business/story/2025-08-20/say-farewell-to-the-ai-bubble-and-get-ready-for-the-crash