Like the dot.com bubble and burst (1995–2002). At MarketWatch technology consultant Jeffrey Funk and Gary Smith — well known to our readers — predict that the current AI bubble is heading for a burst. The problem, they say, is that “Companies claim they are using AI to do things better, faster and cheaper —with no evidence whatsoever”:

The AI castle in the air achieved liftoff when OpenAI introduced its generative AI service, called ChatGPT, in late 2022. Suddenly, economists and consultants began “demonstrating” its superiority in call centers, management consulting, the design of new materials and programming. Companies began announcing that they were close to or already had achieved artificial general intelligence (AGI) — the ability to do any intellectual task that humans can do. During the dot-com bubble, companies added dotcom to their names. During the current AI bubble, companies claim they are using AI to do things better, faster, and cheaper — with no evidence whatsoever.

The breathless AI hype coming from companies trying to raise cash and sell products is unsurprising. Nor is it surprising that academics have again been caught up in the frenzy, perhaps most spectacularly by Wharton professor Ethan Mollick’s assertion that the productivity gains from AI’s large language models (LLMs) might be larger than the gains from steam power …

We have discussed the absence of profits for the so-called unicorn startups and we recently showed that AI companies have far less revenue than did dot-com companies. We estimate that the 2024 revenues for AI companies are in the range of $10 billion to $30 billion. In 2000, internet subscribers paid about $850 billion in 2024 dollars, ecommerce generated about $500 billion in 2024 dollars, and 134 million PCs were sold for about $1.2 billion in 2024 dollars. The revenue of AI companies is 50 times smaller.

“Opinion: Big Tech’s AI dream demands real money — but even more wishing and hoping,” (February 12, 2025)

But, as Funk and Smith note, much of the tech industry thrives on a ceertain type of optimism: “Facts be damned. Everyone loves a good story”

And bubbles tend to inflate silently. It is mostly the burst that is noticeable.