Generative AI still needs to prove its usefulness

Generative AI took the world by storm in November 2022, with its release OpenAI service ChatGPT. One hundred million people started using it, almost overnight. Sam AltmanThe CEO of OpenAI, the company that created ChatGPT, has become a household name. At least six companies have competed with OpenAI in an attempt to build a better system. OpenAI itself strived to excel GPT-4Its pioneering model, It was introduced in March 2023with a successor supposedly called GPT-5. Almost every company has been quick to find ways to adopt ChatGPT (or similar technology, made by other companies) into their business.

There’s just one thing: generative AI doesn’t work well, and probably never will.

Essentially, the generative AI engine is fill-in-the-blanks, or what I like to call “autocomplete on steroids.” Such systems are great at predicting what might sound good or reasonable in a given context, but not at understanding what they are saying at a deeper level; AI is constitutionally incapable of validating its work. This has led to enormous problems with “hallucinations”, where the system unreservedly asserts things that are not true, while listing critical errors in everything from arithmetic to science. As they say in the army: “He often makes a mistake, but he never doubts it.”

Systems that are often wrong and never questionable make great demos, but are often poor products in their own right. If 2023 was the year of AI hype, then 2024 was the year of AI disappointment. The thing I discussed in August 2023, which raised initial skepticism, is becoming more frequently felt: generative AI may turn out to be useless. Profits are not there –Estimates indicate OpenAI’s 2024 operating loss could reach $5 billion, and a valuation of more than $80 billion doesn’t line up with a lack of earnings. At the same time, many customers seem to be disappointed with what they can actually do with ChatGPT, compared to the unusually high initial expectations that have become common.

Furthermore, all the big companies seem to be working on the same recipe, making bigger and bigger language models, but they all end up in roughly the same place, models that are about as good as GPT-4, but not as good. Much better. What this means is that no single company has a “moat” (the company’s ability to defend its product over time), and what this in turn means is that profits are diminished. OpenAI has already been forced to cut prices; Now Meta offers similar technology for free.

As I write this article, OpenAI is testing new products but has not actually launched them. Unless some major breakthrough worthy of the GPT-5 name is made before the end of 2025 that is decisively better than what their competitors can offer, prosperity will be distant. The enthusiasm that has supported OpenAI will wane, and since it is the poster child for the entire field, the whole thing may soon collapse.