I am ready for the AI bubble to pop. Just not the way the Luddites want it to. I want open source to destroy the collective AI ecosystem.
The Signal
The AI bubble isn’t cracking because demand vanished. It’s cracking because the price tag no longer makes sense. Open-source models now deliver comparable performance at a fraction of the cost—six times more cost-effective, clean and simple. And when buyers notice they can get the same results without paying monopoly rent, the math turns brutal.
Businesses aren’t sentimental. They don’t care about brand mythology. They care about output per dollar. And right now, open source wins that fight every time. Beautiful, right?
The Mechanism
Open-source models are closing the performance gap within months of each proprietary release. Not years. Months. That pace changes everything. It means expensive closed systems lose their moat almost as soon as they build it.
Chinese teams like DeepSeek and Alibaba lead this charge, posting top-tier benchmark results in the open. Europe and the US aren’t spectators either. Mistral’s Large 3 sits second among open-source non-reasoning models on LMArena, breathing down the necks of its Chinese peers. AI2’s Olmo models go even further—fully open, from training data to parameters, no black boxes, no mystery meat.
And when organizations choose models based on efficiency instead of hype, the savings stack fast—US$20 billion to US$48 billion every year. That money doesn’t disappear. It just stops flowing to inflated balance sheets.
The Verdict
The bubble should pop. And we should stop pretending that’s a problem.
Open source forces reality back into the market. Prices fall. Access widens. Power spreads. The idea that AI only works when controlled by a few massive firms collapses under its own weight.
But here’s the part nobody wants to say out loud—this isn’t a threat to innovation. It’s the correction innovation needed. When models are cheaper, transparent, and good enough, progress speeds up. Builders build. And the industry grows up.
So yes, let open source pop the bubble. Then watch what survives.