By Brian Shilhavy
I have published dozens of articles since the beginning of 2023 when the AI frenzy started, showing that it was poised to be the biggest market bubble of all time.
While there were a few dissenters back then, now more people are waking up, and the headline news on the Dow Jones publication “MarketWatch (https://www.marketwatch.com/story/why-the-man-behind-the-haters-guide-to-the-ai-bubble-thinks-wall-streets-hottest-trade-will-go-bust-ac398ce0)” today kicked this warning into the mainstream media.
The only thing I disagree with that the analyst said in this interview, it that “the AI boom will eventually lead to a painful bust on par with the collapse of the dot-com bubble.”
Ah, no. When you look at the total spending on AI right now, this bubble is MUCH bigger than the dot-com bust, which I lived through and even created my own ecommerce company during that time which is still operational.
When this AI bubble bursts, the effects will be FAR WORSE!
Why the man behind ‘The Hater’s Guide to the AI Bubble’ thinks Wall Street’s hottest trade will go bust
Excerpts:
Ahead of earnings reports from several of the major so-called AI hyperscalers due this week, MarketWatch spoke with Zitron to learn more about his perspective. Zitron elaborated on some of the points he made in a recent edition of his newsletter, “Where’s Your Ed At” and explained why he believes the AI boom will eventually lead to a painful bust on par with the collapse of the dot-com bubble.
MarketWatch: In your view, what are some of investors’ most common misconceptions about generative AI and its feasibility as a business?
Zitron: It doesn’t make any money or profit. Really, depending on the company, it is one or both. It’s one of the strangest things I’ve ever seen. It’s not like there are a few incumbents that are profitable but only making a little money. Even the two largest companies making the most revenues, OpenAI and Anthropic, are burning through billions of dollars a year.
MarketWatch: There has been a lot of talk about the potential for AGI — artificial general intelligence. How close are we to developing that?
Zitron: We are nowhere. We don’t have proof it’s even possible. We just don’t. Even Meta, which is currently giving these egregious sums of money to AI scientists — their lead AI scientist said scaling up large language models isn’t going to create AGI.
We do not know how human beings are conscious. We don’t know how human thinking works. How are we going to simulate that in a computer?
Furthermore, there’s no proof that you can make a computer conscious, and right now, they can’t even get agents right.
How the hell are they meant to make a conscious or automated computer? These models have no concept of right or wrong, or rules, or really anything.
They are just looking over a large corpus of data and generating, as they are probabilistic, the most likely thing that you may want it to. It is kind of crazy that they can do it, but what they are doing is not thinking.
Reasoning models are not actually reasoning. They do not reason. They do not have human thought, or any thought. They are just large language models that just spit out answers based on what the user wants.
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The Most Revolutionary Act 
The important question is: How do you create something smarter than yourself? Simple answer is: You can not.
This is not like improving precision in mechanics, far from. AI’s are computers and limited. Size, speed and quantity doesn’t matter. This is pretending something being something else and far beyond the programmers comprehention. We have seen that before, like in electronics (“smart*“), “green” electricity (EV’s, sun, wind etc) and politics (foremost left wing ideologies). Call a spade a spade, not a big spoon …
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Excellent point, Sasjal. The reality is that AI algorithms have been running public institutions (especially banks) for years. It’s my view this is why everything is breaking down (ie why banks make so many mistakes and why it takes so long to carry out the simplest business with them).
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