It’s different this time. How many times have we heard that? It usually turns out to be wishful thinking. This time, the generative-AI bubble may really be different than the dot-com bubble — just not in a good way. The number of generative AI users is growing faster than the number of internet users in the late 1990s — except the comparison is essentially meaningless. Think about it. What did people have to do to become internet users in the late 1990s? They had to buy a computer and subscribe to an internet service provider, which were both expensive. The Compaq ProSignia Desktop 330 was $2,699 in 1999 ($5,101 in 2024 dollars) and that didn’t include applications software such as Microsoft’s Word, Excel and PowerPoint. Bell Atlantic offered a digital subscriber line service for $59.95 a month in 1999, or $113 in 2024 dollars. How much does it cost to use generative AI today? Nothing. You already own a computer and pay for internet access, and OpenAI and others offer limited-use services for free. The substantial cost of accessing the internet 30 years ago meant that users anticipated substantial payoffs. The minimal cost of accessing ChatGPT and other generative-AI systems today means that users don’t need much of a payoff, if any, to give it a try. Why are economists at the Federal Reserve Bank of St. Louis and elsewhere making this silly comparison? The use of essentially free services — like social media, email, messaging and other apps — doesn’t mean they are particularly useful. If anything, they are addictive entertainment that we pay for with our time.

Full opinion : Why the AI bubble is similar to the 2000s dot.com bubble and will come crashing in near future.