I find the argument for the bubble to be extremely straightforward.

Currently, investment into AI exceeds the dot-com bubble by a factor of 17. Even in the dot-com era, the early internet was already changing media and commerce in fundamental ways. November is the three-year anniversary of ChatGPT. How much economic value are they actually creating? How many people are purchasing AI-generated goods? How much are people paying for AI-provided services? The value created here would have to exceed what the internet was generating in 2000 by a factor of 17 (which seems excessive to me) to even reach parity with the dot-com bubble.

"But think where it'll be in 5 years"—sure, and let's extrapolate that based on where it is now compared to where it was 3 years ago. New models present diminishing returns. 3.5 was groudbreaking; 4 was a big step forward; 5 is incremental. I won't deny that LLMs are useful, and they are certainly much more productized now than they were 3 years ago. But the magnitude of our collective investment in AI requires that a huge watershed moment be just around the corner, and that makes no sense. The watershed moment was 3 years ago. The first LLMs created a huge amount of potential. Now we're realizing those gains, and we're seeing some real value, but things are also tapering off.

Surely we will have another big breakthrough some day—a further era of AI which brings us closer to something like AGI—but there's just no reason to assume AGI will crop up in 2027, and nothing less that that can produce the ROI that such enormous valuations will eventually, inexorably, demand.

I don’t get why people find it so hard to understand that a technology can be value-additive and still be in a position of massive overinvestment. Every generation of Californians seeks to relive the 1848 gold rush, spending millions excavating rivulets for mere ounces of (very real!) gold.

What is AGI in your mind? Let's take someone who once upon a time was responsible for grading papers. As far as that person is concerned, AGI has arrived for their profession (it arrived nearly two years ago for them). You'll never be better than something that has read every book ever and can write better than you. AGI will come in tranches. Are you really going to hire that developer because you need extra manpower to stand up test coverage? No, so as far as that developer is concerned, AGI has arrived for that part of their professional career.

The bet is not that there will be this one seminal moment of AGI where all the investment will make sense. The bet is that it has already showed up if you look for specific things and will continue to do so. I wouldn't bet against the idea that LLMs will introduce itself to all jobs, one at a time. Reddit moderators, for example, will meet AGI (as far as they know, their entire world being moderating) sooner than say, I don't know, a Radiologist.

The universe of people getting paid to make CRUD apps is over. Many here will be introduced to AGI faster and sooner. Then it could be phone customer support representatives. It could show up for the face-to-face worker who is now replaced by a screen that can talk to customers (which already arrived yesterday, it's here). It'll appear erratic and not cohesive, unless you zoom out and see the contagion.

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Rome needed to recognize that the Barbarian hordes had arrived. Pay attention to all the places the invasion has landed. You can pretend like the Vandals are not in your town for a little bit, sure, but eventually they will be knocking on many doors (most likely all doors). We're in a time period of RADICAL transformation. There is no half-assing this conviction. Practicality will not serve us here.

> How many people are purchasing AI-generated goods?

Probably a lot. I remember my mom recently showing me an AI-generated book she bought. And pretty much immediately refunded it. Not because it was AI, but because the content was trash.

> Even in the dot-com era, the early internet was already changing media and commerce in fundamental ways.

I agree that AI is overhyped but so was the early web. It was projected to do a lot of things ”soon”, but was not really doing that much 4 years in. I don’t think the newspapers or commerce were really worried about it. The transformation of the business landscape took hold after the crash.

That "factor of 17" comes from an interest rate model that is unrelated to AI.

> The value created here would have to exceed what the internet was generating

Its precisely why these companies are investing so much, robots combined with AI will be creating that value.