Current Viewpoint on AI Market (October 2025)

Unless you’re in the game and reading a lot of what’s coming out, you’re just not seeing the future.

For example, last week DeepSeek released a great OCR model. Most people would say “OCR is basically solved.” But what they did is a model that just uses pixels. And it turns out you might be able to fit more text per unit of compute as pixels than as tokens. That’s a very important result.

AI is particularly pernicious at self-deception because it causes the average person to think they understand the future due to ChatGPT feeling like science fiction. Meanwhile, they are overconfident about whatever it is they think is happening and how it will impact the economy and society.

My impression has been kind of like how everyone thinks they are an above-average driver. Everyone thinks they are juicing up AI more than the average person. So we all go and vibe code some app and think we’ll beat everyone else doing the same. Because the contrast with the before times is so big, that we don’t adapt.

But then go to Reddit r/agents and see that the same degens that were YOLOing crypto 2 years ago are building “agents” (really workflows) and hustling their way into quick revenue.

That revenue is temporary because most business owners attribute the magic of the solution to the entrepreneur instead of the upstream infrastructure, because they don’t understand how it all works. But when they do and the market is saturated, a lot of the vertical plays that don’t have a strong market dominance will race to the bottom. They will become free.

This causes the market to be significantly behind reality. Every VC pitch is about AI right now, but it’s really simple workflows, and many investors don’t grok the difference. This is what causes a bubble. It’s not whether AI will have durable impact, but whether the median investor understands how and where the impact accrues.

Hence, we’ll experience a market retraction, as long as humans control capital and the means of production, as we have many times before, regardless of AGI timelines.