This AI Boom Will Bust

The Slope of Enlightenment is Coming

The investment boom in regenerative AI that began in November is doomed.

I can’t tell you how. I can’t tell you when. I just know it will happen. (The above illustration is what Cutout.Pro created when I asked it to describe the theme of this story.)

I’ve seen too many of these things in my 45 years as a business reporter not to know that. I saw the Houston oil boom bust in the early 1980s. Then the savings and loan bust, the 1987 market collapse, and on and on. I spent three years predicting the dot com bust before it happened. This was followed by the 2000s’ housing bust, which produced the Great Recession, the COVID bust, and the 2022 tech wreck.

There have been dozens of smaller busts over the years. Every boom carries with it the seeds of its own destruction in what Gartner Group calls the “hype cycle.” There’s a difference between the hype cycle and past cycles of panics, like the Tulip Panic or the 1929 stock market crash. That is, the hype cycle leaves something real behind. Gartner calls this the “slope of enlightenment” and “plateau of productivity.”

It took years after the dot-bomb went off in 2000 to see its positive changes. Productivity didn’t blossom until after people adapted to the technology and learned how to both cut costs and increase revenue with it. That’s going to happen this time as well.  

In the end today’s AI boom is an evolution. It evolves from the huge databases built by the Cloud Czars, from the technology used to search those data stores, and from the ability of Graphics Processing Units to turn out results quickly.

Most of the gains we’ve seen so far are in what I call the Machine Internet. Machines with sensors that detect changing conditions, often connected wirelessly to cloud-based software that measures and adjusts faster than people can. This will come to consumers in the form of Alexa and Siri becoming more useful and more intuitive.  

The excitement over computers drawing, composing, writing, and coding is going to die down. In the end software serves people. It’s not the other way around. The extent to which it serves which people is a political discussion. But there’s no doubt that I have had a richer, longer, healthier life than my parents did, or their parents did, thanks to technology driven by Moore’s Law.

AI will be no different for my kids, and for yours. We’ll get past the panic, and we’ll get past the boom. The slope of enlightenment is coming.