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AI’s results are mediocre, Steven J. Vaughan-Nichols writes, and it’s as good as it’s going to get. He believes that the AI bubble is bursting.
“Most companies,” he says, “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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The Air Is Hissing Out Of The Overinflated AI Balloon
By Steven J. Vaughan-Nichols as published by The Register
There tend to be three AI camps:
- AI is the greatest thing since sliced bread and will transform the world,
- AI is the spawn of the Devil and will destroy civilisation as we know it, and
- “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 realise that its results, while fast and sometimes useful, tend to be mediocre.
Don’t believe me? Read MIT’s NANDA (Networked Agents and Decentralised AI) report, which revealed that 95 per cent 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 per cent 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 per cent prefer AI for drafting emails, 65 per cent 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 centre 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, “apologised to the employees concerned.” And I bet many of you thought that customer service call centres 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.
More context:
- Every question you ask, every comment you make, I’ll be recording you, The Register, 18 August 2025
- Prohibition never works, but that didn’t stop the UK’s Online Safety Act.. The Register, 8 August 2025
- How Google profits even as its AI summaries reduce website ad link clicks, The Register, 29 July 2025
- Caught a vibe that this coding trend might cause problems, The Register, 25 July 2025
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 dot-com crash, but many of you weren’t, so here’s a quick history lesson. The NASDAQ saw a 77 to 78 per cent 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 per cent 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 per cent drop in value. Even Nvidia has fallen by 3.9 per cent. 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.
[Related: Ed Dowd: The imminent global “deep recession” will be used to usher in CBDCs]
About the Author
Steven (“sjvn”) Vaughan-Nichols is a business and technology journalist who has written over 10,000 articles. He has written for technical publications, such as IEEE Computer, ACM NetWorker and Byte; technology business publications, such as eWEEK, InformationWeek and InfoWorld; popular technology, such as Computer Shopper, PC Magazine, & PC World; and, corporate media, such as CBS News, Washington Post, San Francisco Chronicle and The New York Times. In 2024 and 2025, his work has been published in CIO, ComputerWorld, CSO, DevOps, Digital CXO, ITSM, Security Boulevard, Spiceworks, The New Stack, The Register and ZDNet.
He has helped to launch six publications: Internet World, Inter@ctive Week, Sm@rt Reseller/Partner, Linux Watch, Open Source Watch, and Practical Technology. He has also written four books and white papers, and other documents for Apple, DXC, HP, HPE, Dell, IBM and Linode.
You can find some of his work on his website ‘Practical Technology’ HERE.
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Categories: Breaking News, World News
Oh good! Bye bye AI. I hate it!