--- title: "Expert Warns That AI Industry Due for Huge Collapse" description: "James Ferguson, founding partner of research firm MacroStrategy Partnership, argues AI is \"unproven\" and due for a collapse." date: "2024-07-09" modified: "2024-07-09" authors: - name: "Victor Tangermann" job_title: "Senior Editor" link: "https://futurism.com/authors/victor" url: "https://futurism.com/the-byte/expert-warns-ai-industry-collapse" categories: - "Artificial Intelligence" tags: - "ai chatbots" - "bubble" - "OpenAI" - "the digest" --- # Expert Warns That AI Industry Due for Huge Collapse ![James Ferguson, founding partner of research firm MacroStrategy Partnership, argues AI is "unproven" and due for a collapse.]() *\Image: Getty / Futurism\* ## Fake It Experts are growing [increasingly concerned]() over early signs that the frenzy surrounding AI could collapse in on itself — a [bubble]() which, if it bursts, could end in disaster. Take James Ferguson, founding partner of the UK-based macroeconomic research firm MacroStrategy Partnership, [who recently sat down]() with *Bloomberg*'s Merryn Somerset Webb for an [episode]() of the "Merryn Talks Money" podcast to argue that there are already plenty of warning signs. "AI still remains, I would argue, completely unproven," he told Somerset Webb, as [quoted by *Fortune*](). "And fake it till you make it may work in Silicon Valley, but for the rest of us, I think once bitten twice shy may be more appropriate for AI." ## Dot AI Bubble It's a notable vote of no confidence, highlighting growing concerns that the sheer amount of capital being poured into AI could lead to a dot-com-style bubble. And it's not just Ferguson who has voiced concerns. "This is precisely what happened with the Internet in 1999, autonomous driving in 2017 and now generative AI in 2024," tech stock analyst Richard Windsor wrote in a [March research note](). Even tech leaders in the industry are warning things could end badly. Former Stability AI CEO Emad Mostaque [warned bankers last summer]() that "I think this will be the biggest bubble of all time." "I call it the 'dot AI' bubble, and it hasn’t even started yet," he added. Ferguson noted some glaring shortcomings with the technology, including "hallucinations," a term used to denote lies dreamed up by large language models like OpenAI's GPT-4. It's a problem that has persisted to this day, with some experts arguing that it's an intrinsic quality of the tech, [meaning that it may never be solved](). "If AI cannot be trusted," Ferguson told Somerset Weebb, "then AI is effectively, in my mind, useless." Then there's the sheer amount of electricity needed to train and upkeep these AI models, making them too "energy hungry." Last week for instance, news emerged that Google's [emissions rose by almost 50 percent in five years](), a trend driven by the company's substantial investments in the AI space and which [falls well short]() of its own climate targets. In short, the industry could be in for a rude awakening. "These historically end badly," Ferguson said. "So anyone who's sort of a bit long in the tooth and has seen this sort of thing before is tempted to believe it'll end badly." **More on the AI bubble:** *[Experts Concerned by Signs of AI Bubble]()* ## Author I've been at Futurism since 2017, where my role has evolved to encompass design, writing, and increasingly editing. I've always been fascinated by space exploration and advanced transportation, which I've leaned into by interviewing luminaries in those fields while closely following the dimensions of policy and regulation that allow next-generation projects to succeed -- or, sometimes, to fail. I'm also keenly interested in the effects of generative AI on society, policies, and democratic institutions, as well as clean energy, physics and biology, and the vagaries of tech leadership. My work for Futurism has been cited by publications including Ars Technica, Gizmodo, PC Magazine, Jalopnik, Fox News, and the New York Post. I spent my childhood living in locations including Manila, the Philippines, and Geneva, Switzerland, attended McGill University, and now live in Toronto, Canada. Before Futurism I worked at AskMen and a small photography studio. In my free time, I'm an avid gardener, foodie, and craft beer lover, as well as a maker of artisanal hot pepper sauces. I have a magnificent dog named Freida. ### Author social links [Bluesky]()