The discussion of the “AI bubble” often conflates two different things: (1) is AI going to justify the valuations we are seeing? and (2) are the specific AI companies we have going to justify their own valuations.

The rapid progress of multiple closed frontier models, along with the rapid progress of open models, suggests that LLMs will be like electric motors, not like social media. Are electric motors worth a huge amount of money economically? Sure. But none of the companies who invented electric motors are especially valuable today, because the technology became a commodity.