Part 8/12:
This financial misalignment indicates that the AI "bubble" is beginning to deflate, with a subsequent phase of consolidation looming. Just as the early auto industry consolidated from dozens of manufacturers to a few dominant automakers, the AI space is expected to undergo similar shrinkage, with only the most viable foundation models and platforms surviving.
Convergence of Costs, Infrastructure, and Market Dynamics
AI infrastructure spending—recorded at over $246 billion in 2024 alone—is rapidly becoming unsustainable. Data centers housing GPU infrastructure depreciate in a matter of years, unlike traditional infrastructure that lasts decades. This rapid obsolescence means that large investments may never be recouped, especially as usage restrictions prevent optimal utilization.