The Great Generative AI Reality Check Is Here

The Long-Standing Warnings About AI Hype

For the last few years, I have been sounding the alarm that the widespread mania for Large Language Models (LLMs) would eventually break.

The technical foundation was simply never strong enough to support the towering hype, a point I argued all the way back in the early days of GPT-2. More recently, since August 2023, I have also been repeatedly warning that the economics of the industry don't add up, as discussed in essays like 'What if generative AI turns out to be a dud?' and 'What exactly are the economics of AI?'.

Despite these points, enthusiasm just kept climbing higher and higher, no matter what I said.

Cracks in the Facade The Tide Begins to Turn

Then we all saw what happened with GPT-5. After years of Sam Altman promising revolutionary advancements, the final, long-overdue result didn't come close to delivering on that vision. A lot of people took note.

Could things finally be changing? Is a dose of reality finally settling in? While it's impossible to know for sure, here are a few potentially significant signs from just the last few days that suggest a shift.

Even influencers who have nothing to do with tech are starting to see it.

And for that matter, it seems even Sam Altman himself is acknowledging the issues.

Okay, that last one is a faked image that someone sent me, which was too funny not to share.

But this one, which inspired the parody, is actually real:

The Unwavering Push for More Capital

Not that Sam is deterred. In his mind, a major flaw is just another excuse to ask for more money.

An Uncertain Future for Generative AI

Without claiming to know exactly what will happen next—after all, things like stock prices and AI startup valuations are driven as much by unpredictable crowd psychology as they are by shaky technical and economic fundamentals—I will just leave this here. It's a cartoon I made (with ChatGPT’s help!) back in mid-July.

Once the markets truly understand this, enthusiasm may indeed collapse fairly quickly.