The AI-Bubble's Most Likely Endgame Looks to Be Not Apocalypse, But an Awful Lot of Useful Compost

All the digging will not uncover a Golden ASI Pony. But the digging will spread an awful lot of very useful fertilizer around, in which very useful and valuable thing swill grow...

Proprietary LLMs are likely to prove lousy businesses—high opex, thin moats, fast commoditization. But their capex won’t vanish. And the value from it will diffuse broadly and equitably : better models for everyone; upgraded grids; repurposed GPU farms; millions of open repos. No Deep Thought, but better weather forecasting, antibiotics, copilots, and the replacement of bureaucratic cookie-cutter with bespoke algorithmic classification isn’t failure.

In short: AI is unlikely to mint new platform monopolies. It is likely to manure the next generation’s digital commons. The bubble finances infrastructure and code that, post‑panic, underpins broad gains.

That will be the case, unless, monkey’s paw-like, freely provided AI-service flows turn out to be very expensive indeed. We can build our own AI-tools to protect our attention from being harvested by the malignity of the Zuckerbergs. But if we do not, their AI tools will harvest our attention to our detriment.

This now looks to me like the most likely AI-Bubble endgame scenario:

FT Alphaville: What if OpenAI is worth more dead than alive? <https://ftav.substack.com/p/what-if-openai-is-worth-more-dead>: ‘Here’s the theory. Proprietary large-language models[’] core technologies still have value, but their developers’ individual business models marry persistently high operating costs with shallow commercial moats and their innovations quickly become commoditised…. The result is better machine learning for all. Companies will die, but the spoils of more than $1tn in capital expenditures can trickle down equitably to a nation’s underfunded labs, studios, factories and faculties. We won’t get Artificial General Intelligence, but we might get improved weather forecasting and some new antibiotics…. YOLO indeed. A common fear about AI is that the bubble’s bursting will metastasize into a financial crisis demanding of government interventions and value-destructive shotgun mergers — but what if it doesn’t? What if all it leaves behind are worthless share options, defaulted bonds, written-off GPU clusters, some slightly upgraded power grids, and several million open-source repositories full of fairly useful code? LLM commoditisation won’t give us Deep Thought, but can be a force for economic good in myriad small ways. Whereas China’s open-model approach seems to already accept this possibility, the Western version can still succeed if a handful of companies stay irrational for longer than they can