News: 1756127979

  ARM Give a man a fire and he's warm for a day, but set fire to him and he's warm for the rest of his life (Terry Pratchett, Jingo)

The air is hissing out of the overinflated AI balloon

(2025/08/25)


Opinion There tend to be three AI camps. 1) AI is the greatest thing since sliced bread and will transform the world. 2) AI is the spawn of the Devil and will destroy civilization as we know it. And 3) "Write an A-Level paper on the themes in Shakespeare's Romeo and Juliet."

I propose a fourth: AI is now as good as it's going to get, and that's neither as good nor as bad as its fans and haters think, and you're still not going to get an A on your report.

You see, now that people have been using AI for everything and anything, they're beginning to realize that its results, while fast and sometimes useful, tend to be mediocre.

[1]

Don't believe me? Read MIT's NANDA (Networked Agents and Decentralized AI) report, which revealed that [2]95 percent of companies that have adopted AI have yet to see any meaningful return on their investment. Any meaningful return .

[3]

[4]

To be precise, the report states: "The GenAI Divide is starkest in deployment rates, only 5 percent of custom enterprise AI tools reach production." It's not that people aren't using AI tools. They are. There's a whole shadow world of people using AI at work. They're just not using them "for" serious work. Instead, outside of IT's purview, they use ChatGPT and the like "for simple work, 70 percent prefer AI for drafting emails, 65 percent for basic analysis. But for anything complex or long-term, humans dominate by 9-to-1 margins."

Why? Because a chatbot "forgets context, doesn't learn, and can't evolve." In other words, they're not good enough for mid-grade or higher work. Think of them as a not particularly bright or trustworthy intern. That may be good enough for $20 a month, but – spoiler alert – [5]AI costs will have risen by ten times or more by next year. Will bottom-end AI be worth that to you? Your company?

[6]

Some businesses that bought into AI wholeheartedly are suffering from buyer's remorse. The Commonwealth Bank of Australia (CBA), for instance, is asking its [7]former call center frontline employees to return to work . CBA found that the call level increased, and managers had to man the phones. The company even, believe it or not, "apologized to the employees concerned." And I bet many of you thought that customer service call centers would be one of the easiest things to switch to AI chatbots. Wrong!

Surely, though, AI is getting better. Right? Right!? I mentioned a while back that we're already seeing [8]AI models collapse , so I see no reason to believe that there will be some extraordinary new AI advance.

Why should I? Why should you? Remember when ChatGPT-5 was going to be the next big thing? You should; it was only the other week. OpenAI CEO Sam Altman said ChatGPT-5 was like having " [9]access to a PhD-level expert in your pocket ." Mind you, [10]it couldn't spell "blueberry," but hey, mistakes happen.

[11]

The only problem was that mistakes kept happening. [12]ChatGPT-5 has proven to be a dud . Or, as one popular Reddit rant put it in the OpenAI subreddit, normally a hotbed of ChatGPT fanbois, " [13]GPT-5 is awful. " I agree.

[14]Every question you ask, every comment you make, I'll be recording you

[15]Prohibition never works, but that didn't stop the UK's Online Safety Act

[16]How Google profits even as its AI summaries reduce website ad link clicks

[17]Caught a vibe that this coding trend might cause problems

So, what happens if companies decide that, since AI is not delivering any real return on investment, they should stop wasting money on it? Well, [18]Torsten Sløk , chief economist at Apollo, a multibillion-dollar retirement investment company, said in July: "The difference between the IT bubble in the 1990s and the AI bubble today is that the [19]top ten companies in the S&P 500 today are more overvalued than they were in the 1990s ."

I was around for the [20]dotcom crash , but many of you weren't, so here's a quick history lesson. The NASDAQ saw a 77 to 78 percent collapse. Many companies didn't survive. Many others that you may think of as being too big to fail, such as Cisco, Intel, and Oracle, lost over 80 percent of their market value.

Glancing at today's market, I see that all the AI companies have seen severe pullbacks, with Palantir leading the way down with a 17 percent drop in value. Even Nvidia has fallen by 3.9 percent. This isn't a bubble popping, not yet, but you can hear the air hissing out.

Even Altman, who should really get an AI cheerleader costume, has admitted that [21]AI is a bubble . His words, not mine. He added: "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes." But, waving his AI pom-poms, he continued: "Is AI the most important thing to happen in a very long time? My opinion is also yes."

Sure, AI is important. In some industries, such as tech and media, according to MIT's researchers, it is changing how business is done. Most companies, though, have found that AI's golden promises are proving to be fool's gold.

I suspect that soon, people who've put their financial faith in AI stocks will be feeling foolish, too. ®

Get our [22]Tech Resources



[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/columnists&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aKyIlzAeBIxAZGLNCQTIQwAAAEo&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

[2] https://www.theregister.com/2025/08/18/generative_ai_zero_return_95_percent/

[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/columnists&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aKyIlzAeBIxAZGLNCQTIQwAAAEo&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/columnists&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aKyIlzAeBIxAZGLNCQTIQwAAAEo&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[5] https://www.theregister.com/2025/08/15/are_you_willing_to_pay/

[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/columnists&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aKyIlzAeBIxAZGLNCQTIQwAAAEo&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[7] https://www.afr.com/work-and-careers/workplace/cba-u-turns-on-ai-job-cuts-calls-back-humans-20250820-p5moif

[8] https://www.theregister.com/2025/05/27/opinion_column_ai_model_collapse/

[9] https://www.theguardian.com/technology/2025/aug/07/openai-chatgpt-upgrade-big-step-forward-human-jobs-gpt-5

[10] https://www.theregister.com/2025/08/13/gpt_5_cost_cutting/

[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/columnists&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aKyIlzAeBIxAZGLNCQTIQwAAAEo&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[12] https://www.theregister.com/2025/08/08/gpt-5-fake-presidents-states/

[13] https://www.reddit.com/r/OpenAI/comments/1mkxy9u/gpt5_is_awful/

[14] https://www.theregister.com/2025/08/18/opinion_column_ai_surveillance/

[15] https://www.theregister.com/2025/08/08/opinion_column_osa/

[16] https://www.theregister.com/2025/07/29/opinion_column_google_ai_ads/

[17] https://www.theregister.com/2025/07/25/opinion_column_vibe_coding/

[18] https://www.apolloacademy.com/author/tslokapollo-com/

[19] https://www.apolloacademy.com/ai-bubble-today-is-bigger-than-the-it-bubble-in-the-1990s/

[20] https://www.investopedia.com/terms/d/dotcom-bubble.asp

[21] https://www.theregister.com/2025/08/15/boy_riding_bubble_realizes_what/

[22] https://whitepapers.theregister.com/



original_rwg

Looks like you're betting the farm on A.I.

Would you like me to run you a bath?

b0llchit

It looks like you filled the swimming pool and put in big bubbles.

Would you like me to pop some bubbles?

AI was 3% better than the Metaverse and NFTs.

Tron

AI has limited value as a user interface for search queries, for those who think that boolean is a South Pacific language.

It may have some use in niche circumstances. This will not be especially lucrative.

It is not reliable enough to be built into operating systems or software and should only be an option. That is, there should always be an 'off' button, or better yet, an 'on' button, so it is off by default.

AI has no investment value, as the ROI is negligible and the data centre costs are vast. Essentially, it is a luxury gimmick.

It is also a major security issue and should not be used on any secure, enterprise, government or military system. It is inherently unreliable, it may phone home and requests to it can be mined.

No sane person would invest serious money in AI.

If you do want to invest money, invest it in your security - no public internet access to your intranet, two systems per desk, lightweight/ephemeral data only on any internet linked system, reduce the amount of data you hold, store it on paper if you can. Use simpler software, which will be more reliable.

As for the AI rollercoaster, it was amusing. Time to move on to the next big thing, hopefully distributed systems, including distributed social media.

Does This Mean...

NewModelArmy

That the cost of graphics cards will come down ?

(or any other AI laden poop).

Dot Dumb

zimzam

I'm not sure I see such direct comparisons to the dot com bubble. Sure the big players are massively overvalued, but hardly anyone else has poured serious money into it. Most have just rebadged old tech with an AI label. So the bubble will pop, but it'll likely be limited to those few companies.

Even then, the ones who have invested in infrastructure like Google and Meta will probably take a bath, but the likes of Nvidia who are cash rich and all their other market segments are still hugely profitable, they'll probably be just fine. Not close to the most valuable company anymore, but otherwise just chug along like they were before.

So I don't think there's much reason to expect a recession from this.

Apartments of the Future? (Recycled data centers)

CapeCarl

"Yeah my apartment building is a bit boxy, few windows. But hey we never lose power during a storm and I have a fiber connection in every room!"

(During the .Com bubble I lived in state CT while simultaneously working for two .Com's, one in MD and one in MA (human hyper-threading))

Re: Apartments of the Future? (Recycled data centers)

m4r35n357

and a communal nuke ;)

I am in the fifth camp

m4r35n357

It is a total bag of wank, and you a1 suckers have been conned big time.

AI like an intern?

OllieJones

Yeah, AI is like an intern. Like a high-school student intern who smokes weed in the parking lot at lunch every day.

It's like the New Riders of the Purple Sage lyric ...

"Smoking dope, snorting coke / trrin' t' write a song / forgetting everything I know / 'til the next line comes along. "

Rock on, Sam.

The horror ...

Anonymous Coward

" Altman, who should really get an AI cheerleader costume "

The picture of Altman all pompoms and the shortest of skirts attempting a high kick is far too gruesome to inflict on humanity.

Re: The horror ...

Anonymous Coward

Do you mean like this :

https://www.thepoke.com/2025/08/20/hercules-actor-kevin-sorbo-keeps-moaning-about-male-nfl-cheerleaders-and-twitter-ratioed-him-right-back-to-ancient-greece/

Re: The horror ...

GeneralDisaster

but you did it anyway, thanks.

The AI bubble

Pascal Monett

So the air is coming out. I'm waiting for someone to slash the tires.

What will this mean for the dozens of bitbarns that are programmed ? I've got the feeling that the electric grid has a chance of surviving the next decade just fine.

Death to AI, and end of career to all the besuited snake-oil salesmen who charmed the Boards all over into believing in it.

useless for almost everything code wise

frankyunderwood123

I went from simple code questions, mostly syntax, to getting LLMs to write tests through to experiments with agentic and prompting.

Now it’s a last resort if I can’t figure something out quickly and usually that’s a waste of time, so back to the old tried and tested RTFM and ask questions.

This is with ChatGPT 4.1 and vscode.

I have a couple of short upcoming courses through work I’ll be attending to see if I can any more insights, but I’m near done with AI as it is now for coding, beyond simple automation. Stub out tests, translate stuff, super simple grunt level stuff, because that’s all it’s good for coding wise.

As has been stated, it doesn’t learn. It does draw from prompt conversation context, but that can unravel into ridiculous hallucinations and a total mess in agentic mode. Incapable of cleaning up, even with very specific prompts.

LLMs have their use cases I guess, but only a naive vibe coder considers them capable of creating structured and logical clean code.

The current crop of "AI" is anything but...

jonha

It always amuses me when people talk about ChatGPT, Claude etc etc as "AI". These LLMs use clever statistical trickery to emulate something (nobody knows what exactly) but do they exhibit "intelligence" in the sense we humans use the word? Nope.

I've used various of these bots for low-complexity tasks (eg "create a complete zsh completion script for app XYZ" or similar) and not once was the result immediately usable. Even after a few iterations the output is just not good enough.

It was only ever going to be "AI"

JimmyPage

I said 25 years ago (at least) when Watson was being talked up that all we are seeing is clever pattern matching.

Nothing has changed. There.

The only thing that has changed is the patterns being matched are gullible idiots and grifting scamsters. And I would say "AI" has knocked that out the park.

Replace 'AI' with 'LLM' in your editorial

sarusa

I think in this case it's worth being pedantic and specifying these are LLMs and not 'AIs'. LLMs absolutely seem to be at a standstill. 'Infinite Scale Up' turned out to be 'we ran out of data and it started human centipede-ing itself'. Performance is flat, the best they're doing right now is drastically cutting the cost (power used) and then making the LLM work much longer to marginally better results. At this point there is no way in hell they are getting Artificial General Intelligence (actual thinking) from an LLM. There never was any way to get that, it's just a stochastic parrot with some human written code trying to whip it this way and that (attention heads, etc.). They just wanted to believe that as they made it bigger and bigger eventually Handwavey Shit] Would Happen.

So if you want actual AGI, or just drastically improved performance from ChatGPT 4 / Claude 4. someone is going to have to come up with a radically new algorithm and/or technology.

I find LLMs really useful for one thing: denoising and upscaling images. It doesn't matter if a pixel or two is off a bit, the result looks better than the original or a naive bicubic upscale. And, uh... yeah, sometimes I use it to OCR text from images but guess what? Sometimes it bullshits, so only if it's not critical! And that will never change, making an LLM not hallucinate is equivalent to the halting problem.

Re: Replace 'AI' with 'LLM' in your editorial

williamyf

Mod parent up.

Upscaling video, cleaning up photos, audio and video, halucinating short video and auido clips or pictures are nice use cases for LLMs.

All the other stuff is dangerous to do.

Even if you train the models with domain specific and/or propiertary data

ben_s

Where this, and very many others, goes wrong is by equating AI with a chatbot. There are huge applications for AI that don't involve it talking to you, and you mostly wouldn't be aware of any of them unless you looked for them.

CBA wasn't about AI

AVR

When the Commonwealth Bank of Australia said they were switching over the call centre to AI, they lied. The judge in the case brought by the call centre workers got really sniffy about it. Apparently they were actually switching to an Indian call centre and using AI as an excuse to fire the workers without going through the process required by Australian law. Then when that lawsuit got filed they dropped the plan, but it got found out in discovery anyway...total clusterfuck but AI wasn't actually the problem.

Re: CBA wasn't about AI

Mage

But they WOULD have used AI if it had worked?

See also chess machine with dwarf inside and Amazon's retail store AI that actually used video to cheap overseas humans.

A PhD level expert in your pocket...

Joe W

... unfortunately you need help with, dunno, a database normalisation warning and the PhD is in turd divination.

"AI is now as good as it's going to get, and that's neither as good nor bad"

Dan 55

It's bad, the energy and water use is off the scale. When the money stops and tech companies have to start charging its real value, nobody's going to want to pay for it.

Means we have to wait yet another generation of phones

Gene Cash

to maybe have something that doesn't have AI taking up 40% of the CPU and half the storage and having to pay extra for the "privilege"

Icon: Can't spell FAIL without AI

"It's the best thing since professional golfers on 'ludes."
-- Rick Obidiah