Are ChatGPT and other popular artificial intelligence tools the most transformative technology in generations, or an overhyped time bomb that could trigger economic disaster?
That debate has captivated Wall Street and Silicon Valley in recent weeks. Even some tech leaders betting billions on AI, such as Meta chief executive Mark Zuckerberg, have said there is evidence that an unstable financial bubble has formed around the technology.
So is AI a bubble? Decide for yourself by considering these four reasons AI may be on track to meet investors’ huge expectations — and four why it may not.
It’s a bubble 
Huge profits are needed for Big Tech’s big AI bet to pay off
The largest tech companies are spending unprecedented sums on AI. Their capital expenditures — money spent on assets like buildings and equipment — have soared over the last two years, as they splashed out on data centers stuffed with powerful computer chips to run AI software.
Skeptics have questioned how those immense investments will be recouped, pointing out that ChatGPT and rival AI products are racking up billions of dollars in losses each year.
JPMorgan recently calculated that the tech industry must draw an extra $650 billion in revenue every year — nearly double Google’s total sales in 2024 — for AI investments forecast through 2030 to earn a modest 10 percent return. ChatGPT maker OpenAI’s revenue is not public but its CEO, Sam Altman, has said it will soon reach a rate that would bring in $20 billion annually. (The Washington Post has a content partnership with OpenAI.)
Not a bubble 
AI chatbots are massively popular
ChatGPT, the chatbot that kick-started the current AI frenzy after its launch three years ago, is still rapidly winning new users, according to OpenAI.
The chatbot has more than 800 million weekly users, OpenAI said last month. It took TikTok, the fastest growing social app, five years to reach 1 billion monthly users, a milestone it passed in 2021.
ChatGPT is especially popular with young people, data released by OpenAI shows. People use it to search for information, help with writing or coding and for personal advice and exploration, according to the company’s research and a Washington Post analysis of publicly shared ChatGPT conversations.
It’s a bubble
Some AI deals look kind of circular
It’s not unusual for companies to be bound into a web of deals with suppliers and partners in their industry. But some recent AI deals have struck industry watchers as out of the ordinary, with companies like OpenAI and chipmaker Nvidia making large investments in their own customers or suppliers.
Some analysts have warned the deals resemble unsustainable patterns seen in previous financial bubbles, where troubles at one company quickly spread to others.
A spokesperson for Oracle declined to comment. OpenAI and Nvidia declined to comment.
Nvidia chief executive Jensen Huang has defended his company’s deals, saying it makes sense for it to invest in the broader AI ecosystem. “I fully expect that investment to translate to extraordinary returns,” Huang said on the company’s third-quarter earnings call this week.
Not a bubble
Nvidia is making real money
Nvidia, now the world’s most valuable public company, is one of the clearest winners from the AI boom. Its computer chips are used to train and run the AI models behind tools like ChatGPT.
The company posted another record quarter of revenue this week, beating investor expectations with sales of $57 billion, an increase of 62 percent from the same period last year. Nvidia forecast that its sales will keep on growing.
“There’s been a lot of talk about an AI bubble,” Huang, the Nvidia chief executive, said on the earnings call Wednesday. “We see something very different.”
It’s a bubble
AI remains largely unable to do actual work
For the AI boom to pay off, the technology must work not just in controlled demos or diverting apps but in messy, real workplaces. But one recent study that challenged top AI systems to perform a wide range of work tasks found that they did poorly.
The tasks were chosen to represent the kind of work that might be assigned to a remote human worker, including creating a video advertisement and drawing up an interior design plan.
The best AI system successfully completed a measly 2.5 percent of the tasks, according to the research team from Scale AI and the Center for AI Safety, a nonprofit that works to understand risks from AI. That suggests it’ll be some time before AI displaces humans from some jobs. A Yale study released last month concluded that AI has not yet disrupted the labor market in a significant way.
Not a bubble
AI is still getting smarter
Artificial intelligence technology is still improving rapidly. One measure of that comes from tests that track progress in the complexity of the work that AI can perform, designed by researchers at METR, a nonprofit that studies the limits of AI systems.
The tests challenge AI tools to perform software engineering tasks of increasing difficulty, ranging from those that take humans only a few seconds up to assignments that require many hours of a coder’s time. Measured that way, the length of the tasks that AI models can successfully complete most of the time has increased exponentially for six years, doubling every seven months.
It’s a bubble
Few companies have deployed AI broadly across their operations …
Businesses could be big business for AI companies — if they actually use the technology. But several surveys have found that while many companies are experimenting with AI tools, few have widely deployed them.
McKinsey reported in November that nearly two-thirds of global businesses adopting AI have not yet scaled the tools across the company.
One problem is that when companies give their employees AI tools, many workers don’t want to use them, said Matt Kropp, a Boston Consulting Group executive who works with corporations trying to deploy AI. “We’re humans, we work the way we work,” he said in an interview. “You have to do something to get people to change their habits and behaviors.”
Not a bubble
… But many more companies are trying to use AI in their businesses
Only a minority of U.S. businesses report using, or planning to use, AI — but the proportion is steadily growing, according to the U.S. Census Bureau.
Srinivas Narayanan, OpenAI’s chief technology officer for business applications, recently said the company has over 1 million business customers. “We’re seeing incredible progress at the rate at which businesses are adapting AI,” he said at a meeting with reporters, predicting that trend would continue.
The health of the AI industry — and the wider U.S. economy — may depend on whether those businesses find enough value in AI tools to spend a lot more on the technology in coming years.
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