The AI Fad Just Burned to the Waterline

By Charles Hugh Smith
January 31, 2025

Sometimes wide moats and billions of dollars to blow lead not to glory but to hubris, which beckons Nemesis.

While everyone was busy reassuring themselves the stock market was still A-OK, the driver of the market–the AI fad–just burned to the waterline. Yes, the current euphoric expectations for AI are a fad, the latest in the endless stream of “gotta have” status signifiers and cultural frenzies. Cutler, Boone Best Price: $23.40 Buy New $30.45 (as of 02:01 UTC - Details)

The core dynamic in all fads is Human Wetware 1.0. Though we glorify our individuality–The primacy of the Individual is the key characteristic of Modernity–we remain a herd animal, alert to every twitch in the herd’s emotional state and anxious to join the herd when it starts running, lest we’re left behind or lose status.

CEOs are just as prone to fads as the rest of us, and this is how the AI fad gathered momentum. A decade ago the warm-and-fuzzy tech fad that enamored every corporate HQ was fuzzy logic, one of the long line of precursors to the current AI mania. So labels touting “fuzzy logic” were slapped on rice cookers as everyone scrambled to cash in on the latest tech fad.

And so now every package of Kroika Cookies is emblazoned with “powered by AI!” Indeed. The leaders of the herd are especially keen to study every shift in the zeitgeist and the pecking order, as the greatest sin for CEOs is to be revealed as incompetent / clueless by missing the latest boat in corporate fads.

Here is one example of the catastrophic consequences not of missing the boat but of blindly climbing on board. On a flight to Shanghai in May 2000, shortly after the NASDAQ dot-com bubble had peaked, my seatmate was a senior engineer working for a Silicon Valley semiconductor equipment maker. Over the course of the long flight, he recounted the domino-like chain of disastrous results of the CEO jumping on the “gotta offshore production” fad that was sweeping through Corporate America.

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