Is AGI a Billion-Dollar Mirage? The AI Circular Trap (medium.com)

The recent series exploring the current state of AI posits that the quest for Artificial General Intelligence (AGI) may be a mirage fueled by an unsustainable economic model. A staggering $110 billion funding round for OpenAI illustrates a circular funding arrangement where tech giants like Amazon and Nvidia invest massive amounts only to ensure they can sell vital infrastructure back to OpenAI, creating a financial "trap." This setup seems to inflate company valuations without addressing the underlying technological barriers that restrict genuine AI advancement. The article argues that further investment is misguided as the industry approaches the flattening of performance gains due to hardware limitations and an exhausted quality data pipeline. Moreover, the analysis suggests that current models rely heavily on inference, as companies compel AI to mimic reasoning to mask its foundational flaws. This shift to "Test-Time Compute" inflates operational costs, creating a situation where companies face rising expenses from complex processing while revenue stagnates due to the influx of open-source models. Without a transformative breakthrough in AI technology and a reconsideration of the financial underpinnings of the industry, the potential for a crash looms, jeopardizing investments and the future of the AI sector itself.