Ed Zitron, a researcher and noted skeptic of artificial intelligence, suggests that the current AI hype is less about a widespread boom and more about a singular entity: OpenAI. As the company behind ChatGPT approaches a significant initial public offering (IPO), Zitron argues that it is this firm that has generated most of the public and investor interest in AI. He warns that if OpenAI were to fail, the repercussions would be reminiscent of the 2008 financial crisis triggered by the fall of Lehman Brothers.
In a report released last month, Zitron outlined what he perceives as serious financial instability at OpenAI. In a July 15 post, he remarked, "The launch of ChatGPT in November 2022 came at the perfect time for a tech industry that had run out of ideas,” asserting that OpenAI's success has fueled a lavish obsession with AI. Zitron also pointed out that OpenAI's main competitor, Anthropic, owes its existence to the influence and funding that emanated from OpenAI's prominence and the competitive landscape shaped by major tech players.
He asserts that the AI bubble hinges on OpenAI's continued operation and the significant attention it has garnered from various stakeholders in the tech ecosystem. "As long as OpenAI remains intact, the bubble persists," he stated, warning that its downfall could mark a critical turning point akin to the Lehman Brothers collapse, signaling both an end to one era and the dawn of a new one.
While he does not predict the timing or specific cause of an OpenAI failure, Zitron envisions it as a pivotal moment that would destabilize markets that have rallied around AI investments and the broader economy that has benefited from extensive capital expenditures by companies chasing AI advancements. He speculated that if OpenAI halted payments to service providers like CoreWeave and Oracle, those entities might struggle to meet their financial obligations. Additionally, Zitron foresees that if OpenAI were to eliminate its free ChatGPT tier and raise user fees, it could dissuade future investments in AI startups.
"I believe that OpenAI's collapse would send shockwaves throughout the stock market, leading to a significant downturn as investors come to terms with the reality that the AI bubble has burst," he warned. He characterized the financial outlay fueling the AI boom as "the greatest capital misallocation in history," echoing sentiments expressed by fellow AI researcher Gary Marcus, who has similarly voiced concerns about the sustainability of the current AI landscape.
