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Every gold rush requires believers. Belief finances the infrastructure, Infrastructure makes the commodity cheap, Cheap destroys the original believers.
It is remarkable to watch OpenAI, NVIDIA, and their founders display the same historical hubris every gold rush produces. History suggests they are overestimating the value of these models.
Right now, LLMs are being treated like divine artifacts. People believe whoever owns the best models, will rule the future. But my god are they wrong about the Economics of it all.
We have seen this exact movie play out many times before.
Part 1 – A Short History
1990s
owning enterprise software was considered an unbreakable moat. Then came Linux — and suddenly the most critical infrastructure on Earth became free and abundant. (thanks to Linus Torvalds)
Then came the internet boom and the inevitable crash of the Dot-com bubble. Thousands of companies were valued simply for “being online.” and most died off. The internet didn’t become worthless — owning the internet did. The winners were the ones who built real businesses on top of it.
2000s & 2010s
Next was the app gold rush. When the Apple App Store and Android Play Store launched, everyone thought apps themselves were the fortune. Then supply exploded. Prices crashed. Only those with Great product, service, distribution, and utility survived.
Part 2 – The Present
2020s Now we are in the AI chapter of Human History.
Crazy amounts of money being poured into these developments, Every investor wants in on the action, but you must understand that LLMs are technologically extraordinary but economically destined to become ordinary. LLMs are not Special. They are just software. They can be
- Downloaded
- Copied
- Tuned & Trained.
- Open-sourced.
- Run locally.
- Embedded everywhere.
Just like Apps and Games that can be Modded & Pirated, So can Ai Models.
As models get smaller, faster, cheaper, and easier to train, supply will explode. And when supply explodes, value collapses. That is not just my opinion. That is economic law. Such is the nature of these Models.
Part 3 – The Future
By 2030–2035, powerful LLMs will be:
- Sitting inside your phone
- Running offline on laptops
- Integrated into operating systems & Apps
- And largely indistinguishable in raw capability
At that point, it is just a commodity Most people won’t pay for an LLM.
They will however, keep paying for:
- Computers that can run them (New & capable phones & computers)
- Products & services of everyday businesses that use them for efficiency
- Products, Systems & tools that are built on top of them
That is where the real value will flow.
The great mistake most people make is worshipping the scaffolding of the infrastructure rather than the cities built upon it.
Yet without this beautiful mistake, without this collective hubris, none of this infrastructure would exist. Every technological revolution requires its over-believers.
However, Investors, stay awake and aware. This is a bubble.
The Proof is in the
- Nature of these Ai models
- Oversupply of nearly-identical models
- Rapidly collapsing inference costs
- Circular funding between the same companies and capital pools
These are the classic fingerprints of every historic capital overshoot.
Conclusion
And this is how every Gold Rush ends, “All the Gold is out of the ground, And Now.”
1 – The Gold miners out of work
2 – All the gold flows into the world, changing hands till the end of time.
The End
– Umar Akram