Press enter or click to view image in full sizePhoto by Cassi Josh on UnsplashThe crash is imminent.
In a previous article, I pointed out the stark similarity between the AI bubble and the subprime mortgage crisis of 2007/2008. It isn’t just that a bubble exists, but that it is being powered by what is arguably more than $1.2 trillion in mis-sold debt. I even called this revelation the AI bubble’s “Big Short” moment. Well, the actual “Big Short” guy, Michael Burry himself, has just revealed he is heavily shorting the very core of the AI bubble. This isn’t just vindication of my analysis; it has spurred others to do the same and strongly suggests a crash is imminent. In fact, this could be the very thing to pop the bubble. Let me explain.
Let’s start with the obvious: why is the AI industry in a bubble?
Well, the reason the AI industry is so valuable and has attracted so much investment is because it will supposedly augment or automate jobs and dramatically increase productivity. However, as it stands, AI is so unreliable that it can’t be used to augment jobs, given that it gets things horrifically wrong constantly and actually decreases productivity in most cases (read more here). We also know that AI training has hit a point of diminishing returns, meaning piling exponentially more money into development won’t yield significantly better results (read more here). Similarly, we…