AI: The Next General Purpose Technology
It's not just a trend; it's a fundamental economic shift on par with the internet itself.
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The AI Bubble Isn't Popping, It's Evolving
Introduction
Talk of an "AI bubble" is everywhere. With tech stocks soaring and massive investments being announced daily, it is easy to draw parallels to the dot-com boom of the late 90s.
While the initial frenzy of the AI hype cycle may be cooling, what we are witnessing is not a bubble on the verge of bursting. Instead, it is the start of a fundamental, long-term shift in the global economy. The game has changed from a race for raw intelligence to a strategic battle over product quality, user experience and real-world infrastructure.
From Blue Ocean to Red Ocean: The New Competitive Landscape
For a brief period, the world of generative AI was a "blue ocean", an open, uncontested market space dominated by a first mover, OpenAI. That era is definitively over. Today, the market has become a "red ocean," a crowded and fiercely competitive environment where major players are battling for market share.
This shift was accelerated by the "AI talent wars," with companies like Meta and Google aggressively poaching top engineers and researchers to build their own powerful models like Llama and Gemini. With multiple high-quality models now available, the competition is no longer just about who can build the most powerful AI but who can attract and retain the largest user base.

Why This Isn't Another Dot-Com Bubble
The comparison to the dot-com bubble is tempting but flawed. While speculative investment is certainly present, the AI revolution is built on a foundation of tangible, real-world assets. The key difference is the massive global investment in physical infrastructure.
Hundreds of billions of dollars are being poured into building data centers and chip fabrication plants. These are long-term capital expenditures that will pay off over decades, not fleeting investments in purely digital concepts.
AI is a General Purpose Technology (GPT). This is a specific economic term for innovations that are pervasive, improve over time, spawn complementary innovations, and transform multiple sectors of the economy from law and medicine to coding and creative work.
This signals a secular trend. Unlike a short-term bubble, this is an irreversible, structural change to the global economic landscape.
The Next Frontier: Competing on User Experience
As AI models become more powerful, we are reaching an "intelligence optimum" for the average user. This is the point where making a model marginally smarter at complex tasks like advanced math or chemistry provides little extra value for most people's daily needs.
OpenAI learned this firsthand with the rollout of GPT-5. Many users preferred the user experience of the previous model, GPT-4o, leading to a backlash that forced the company to bring the older model back. This feedback was a clear signal: the market is maturing, and the focus is shifting from raw capability to the overall user experience (UX). The next generation of models, like the anticipated GPT-6, will likely compete on features like memory, personalization, and ease of use rather than just raw intelligence.
Smarter and Sleeker: The Future of AI Model Strategy
The biggest challenge for companies like OpenAI is no longer just training the next powerful model, but running it affordably for hundreds of millions of users. This "compute constraint" is forcing a change in strategy. Instead of releasing massive, inefficient "frontier models" to the public, companies are adopting a more sophisticated approach.
This new strategy involves distillation, a process where an enormous, cutting-edge internal model is used to train a smaller, faster and more efficient model for public release.
This allows companies to deliver a highly capable product that is cheaper to operate at scale. This shift explains why we might see future models like GPT-6 arrive sooner than expected, the focus is on refining and optimizing capability, not just on building ever-larger models.
Conclusion
The initial gold rush of the AI revolution is settling down, giving way to a more mature and sustainable industry. The conversation is shifting from hype to practical application, and the market is now being defined by real infrastructure investments and intense competition. While the stock market will always have its cycles, the underlying technology is here to stay. The companies that will win in this new era are not necessarily those with the single smartest model, but those that can provide the best, most intuitive, and most valuable experience to their users.
That’s all for today, folks!
I hope you enjoyed this issue and we can't wait to bring you even more exciting content soon. Look out for our next email.
Kira
Productivity Tech X.
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