In a new article for The Telegraph, Cory Doctorow calls the artificial intelligence industry the largest financial scheme for wasting funds in human history. The primary reason is the catastrophic gap between colossal capital expenditures and actual generated revenue.
What Happened
According to the analysis, current investments in the AI sector exceed $1.4 trillion, while the global annual turnover is less than $60 billion. This creates a critical imbalance where the volume of invested funds exceeds potential revenue by more than 20 times.
Context
Unlike the internet era, the modern AI economy demonstrates an inverted model: each new generation of models and the growth in the number of users at this stage lead to increased operating losses rather than profits. Furthermore, about 35% of the S&P 500 index is tied to the seven largest technology companies, most of which (with the exception of Nvidia) are not yet generating net profit from their AI assets.
Why It Matters for the Industry
For the industry, this means an inevitable revaluation of the technology sector and increased pressure on startups. Investors and regulators are beginning to shift their focus from infinite scaling of model parameters to real return on investment (ROI), computational resource efficiency, and project unit economics.
Why It Matters for Users
Readers should realize that the current AI boom may face harsh economic realities. The hype surrounding the infinite scaling of capacity could be replaced by a period of market correction, where only those products that provide real utility and revenue—rather than just consuming resources—will remain in demand.
Sources
Author
Look at AI, Editorial