It’s been less than two years since OpenAI introduced ChatGPT and changed the world, but there are already signs that the technology may be hitting a plateau.
OpenAI’s latest model, Orion, was designed to replace and be a significant step beyond GPT, but the model has fallen short of the company’s performance goals. While this is an improvement on OpenAI’s GPT model, it’s not quite the leap the company had hoped, and artificial general intelligence (AGI) is further along than engineers like OpenAI CEO Sam Altman had hoped. There is currently mounting evidence that there may be.
As it turns out, OpenAI isn’t the only AI startup experiencing challenges like this. According to Bloomberg, the latest version of Alphabet’s Gemini has not met internal expectations, and Anthropic, seen as the AI startup closest to OpenAI, has been slow to release its latest Claude chatbot model, called 3.5 Opus. They say it’s late.
Image source: Getty Images.
Will the AI bubble burst?
The biggest reason these models seem to have reached a plateau is that early models have exhausted resources such as Wikipedia, social media, and news sites, and are struggling to find new sources of substantive training data. It’s about being there. “The AGI bubble is bursting a little bit,” Margaret Mitchell, chief ethical scientist at AI startup Hugging Face, told Bloomberg about the technological challenges.
In other words, until the problem of ensuring reliable training data sets is resolved, the expected performance of advanced AI models is likely to be lost, at least in the short term.
It’s unclear at this point how deep the slowdown will be, but this news could shake up the stock price rally across the tech sector as other industry players are calling for an AI bubble.
The law of diminishing returns appears to be affecting large-scale language models (LLMs), and the AI sector could take a hit, with Nvidia (NVDA -3.26%) This seems to be the most at risk.
After all, Nvidia’s graphics processing units (GPUs) are used to train AI models like ChatGPT, and demand for these components has skyrocketed since ChatGPT’s launch. Cloud infrastructure companies, self-driving car companies like Tesla, and AI startups are stocking up on Nvidia chips in anticipation of the AI boom.
However, there is still no “killer app” for generative AI, and while the reputation of the technology seems to be that it is impressive and capable, the use cases are limited, especially if it is still error-prone. It’s not completely clear.
Some Wall Street analysts are wondering whether the billions of dollars companies like Alphabet and Microsoft are spending on capital investment will pay off, as end-user spending on generative AI still appears to be woefully low. Some people have expressed skepticism.
David Kahn, general partner at venture capital firm Sequoia Capital, criticized the inflating AI bubble in June, saying the revenue expectations implied by building AI are expected to reach $600 billion by the end of this year. said. Meanwhile, OpenAI, the leader in this space, is expected to generate just $3.7 billion in revenue this year. The target is $11.6 billion in 2025.
What it means for Nvidia and its AI peers
Nvidia stock has so far ignored this news, indicating that investors don’t see it as a threat, and AI stock is currently trading near all-time highs. A slowdown in LLM profits does not mean the end of technological advancement. OpenAI’s Orion model is currently undergoing post-training. This is a routine step aimed at fine-tuning and fine-tuning the model’s tone before its public release, which is expected to take place early next year.
While there are other ways to advance AI beyond LLM, this has been the preferred approach for large tech companies in the two years since ChatGPT’s launch.
Nvidia is scheduled to release its third quarter earnings on Wednesday, and there are likely to be some questions about the challenges of scaling AI models and the possible impact on Nvidia.
Analysts expect NVIDIA to report strong results again, with the consensus forecast for revenue to rise 82% to $32.9 billion. For now, the company’s rapid growth doesn’t seem to be a problem, but if AGI’s stock price outperforms investors’ expectations, the stock price could be affected at some point.
Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
