Five signs that Generative AI is losing traction

Usage may be declining, just as scaling “laws” seem to be losing steam

1. Earlier today I wrote about how vibe coding seemed to be losing steam, with usage declining, quite likely because people are growing disenchanted with the results.

2. I just saw something that should be even more unsettling to anyone contemplating trillion dollar AI infrastructure plays:

3. This also fits with this graph from Apollo Global Management’s Chief Economist Torsten Slok, based on Census Data, from early September:

4. TechCrunch just reported that “ChatGPT’s mobile app is seeing slowing download growth and daily use” based on data from Apptopia

I would bet a lot of money that OpenAI’s Sora 2-driven competitor to TikTok will experience a similar rise and fall.

Meanwhile, just as I writing this, MSNBC reported that Airbnb CEO Chesky said on CNBC that “ChatGPT isn’t ‘quite robust enough’ to integrate into travel app”.

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If and when the whole generative AI edifice comes crashing down, it will be in no small part because too many otherwise smart investors read too many graphs—from “LLM scaling” to usage statistics—too naively, assuming that things had been going up for a while would continue to go up at the same pace, indefinitely.

This is, of course, a version the trillion pound baby fallacy I have mentioned before:.

I will close with something that a financial analyst named Ross Hendricks wrote on X a couple days ago that may well turn out to be prophetic: “US tech co’s spending half a trillion each year is not bullish… it’s the single greatest exercise of capital destruction in history”. Investors might wise up, any day now….