From extreme ups to startling downs, every week can feel like the peak of expectations and the trough of disillusionment for AI.  

SHOW: 954

SHOW TRANSCRIPT: The Cloudcast #954 Transcript

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SHOW NOTES:

THE UPS AND DOWNS OF AI - THE CONSTANT HYPE CYCLE

Healthy Competition [YES]

Consumer and Enterprise Markets [YES]

Market leader(s) [YES, sort of]

Well-Defined, profitable business model [NO]

Open, lower-cost alternative emerged [YES/NO]

Usage patterns emerging [YES/NO]

• [ups] Constant high-profile VC, Sovereign wealth, hyperscaler funding of AI startups
• [ups] Constant high-profile CAPEX spending by hyperscalers, model builders, data center builders
• [ups] Rapidly growing user-bases
• [ups] Growing revenues at some companies (NVIDIA, OpenAI, Google, Microsoft, Anthropic)
• [downs] Growing losses at high-profile companies  
• [???] Frequent, high-profile movement by key people at high-profile companies (engineers, leadership)
• [downs] Frequent, partial acquires of founders and key engineers, but not entire companies
• [downs] Secondary market scales of startup shares, bypassing traditional secondary and public markets
• [downs] No “NetFlix of AI” company
• [downs] No “AI Agent” success stories
• [???] Consumer “winner-take-all” mindset from AI companies
• [downs] Enterprise companies struggling to create ROI+ projects (in early days)
• [???] Enterprise “bundles” raising prices (CoPilot, Gemini, etc.)
• [downs] Unclear if new frontier models are getting better than previous versions (e.g. GPT-5)
• [???] Are inference prices coming down? 
• [ups] Consumers have many excellent AI choices
• It’s unclear if AI companies have created any moats yet; it’s unclear if LLMs can be differentiated
• Chatbots, developer-assistants and document management are use-cases. What else?
• Are agents ready to be mainstream yet? 
• Pick-axe providers are making the money right now (NVIDIA, Broadcom, etc.), but is there moat entirely on super-premium HW?
• User-experiences are still being understood
• Will AI + Ads (business model) be a big bang event, or happen gradually? 

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