The Air Is Hissing Out Of The Overinflated Ai Balloon

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.

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

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 – AI costs will have risen by ten times or more by next year. Will bottom-end AI be worth that to you? Your company?

Some businesses that bought into AI wholeheartedly are suffering from buyer’s remorse. The Commonwealth Bank of Australia (CBA), for instance, is asking its 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 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 “access to a PhD-level expert in your pocket.” Mind you, it couldn’t spell “blueberry,” but hey, mistakes happen.

The only problem was that mistakes kept happening. 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, “GPT-5 is awful.” I agree.

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, 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 top ten companies in the S&P 500 today are more overvalued than they were in the 1990s.”

I was around for the 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 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. ®

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