I’m going to guess that you’re younger and if you were alive through the dot com bubble that you weren’t really old enough to understand what was going on. Back then, no one was seriously saying that the internet was a fad or going away or anything like that, although you can find a few prognosticators that will contradict me, no one took them seriously and ridiculed them even then. No, it was a bubble because people were irrationally throwing money at companies that did “web stuff” and added “dot com” to their names. Investors were so hyped up about the potential of the internet that they threw all common sense out the window and gave money to anyone, and companies in turn dumped money into salaries and expensive perks to hire people who barely knew what they were doing.

The amount of waste and excess was appalling to people when the bubble popped and they saw how much companies had spent on unnecessary bullshit. I remember auctions where you could pick up super expensive Aeron chairs for dirt cheap because clueless companies didn’t know how to spend money and all the big internet companies had plenty of chairs like that. There was a ton of money dumped into infrastructure too. Cisco made a boatload of money during the bubble and after it popped they had so much used equipment floating around that their stock is only now recovering to their dot com peak twenty five years later. Companies like Worldcom blew up because of this infrastructure boom, but when the bubble popped they engaged in fraudulent accounting shenanigans in order to appear healthy.

I would argue the demand for “the web” in 1999 far exceeds that of AI today, and yet there was absolutely a crash like the housing market collapse. It’s not that there’s no use for AI or that some of the capital expenditures might prove useful in the decade ahead, it’s that so much money was thrown around irresponsibly to anyone that claimed to have a web presence or something to do with the internet, even when they didn’t, that there was a huge economic contraction when people finally sobered up - ie. the bubble popping.

I see the exact same excesses now:

• Companies that have nothing to do with AI shoehorning it in to claim they’re part of this big boom
• investors throwing money at ludicrously bad ideas because they are added “AI” to a product no one wanted to begin with
• People with expertise in the field having absurd amounts of money thrown at them to gain competitive advantage
• Brand new companies worth billions of dollars that are not pulling in a fraction of the revenue necessary to justify that valuation

That said, I believe that this is even worse than the dot com bubble for at least two reasons:

1. Back then, these companies were public, and were required to disclose a bunch of financial information as a result. Sure a lot of people ignored the warning signs and got caught up in the hype and FOMO, but the fraud was so much easier to unravel because their numbers weren’t hidden like today’s private AI companies.
2. Dark fiber after the bubble popped is still useful today, so a lot of the money spent then enabled future services, as you alluded to. On the other hand, today’s GPUs will be obsolete in a few years. Aside from being surpassed by newer technologies, the cards themselves will only run for so long before failure. The data centers themselves will still have some value, and some of the electrical generation being built will be useful, but overall, the long term benefits won’t be nearly as transformational.

So yeah, it’s a bubble, it will pop, and it will suck when it does. AI isn’t going away but most of the companies soaking up money now will end up as historical footnotes, like Netscape or Yahoo are today. LLMs and other generative AI will remain inefficient, continue to “hallucinate”, be used for propaganda, and further alienate people from one another. Yay?