The AI Boom, Bust and Boom Cycle

Since 2022, we've experienced the first major boom cycle of AI technology. From large language models to video creation tools, AI has fundamentally shaken up our technology paradigm. Just as we held on for dear life while AI rose into public consciousness, we're now approaching a moment to breathe and center ourselves as the initial AI frenzy quiets down.

I predict we're heading into a short but significant AI bust cycle. Here's why this correction is inevitable—and why it might actually be a good thing.

The Unsustainable Economics of Current AI

The current AI business model simply isn't working. Google, OpenAI, and Anthropic are struggling with the fundamental economics of their freemium approaches. Much like YouTube had to completely reimagine its revenue model in the 2010s to support massive server costs, AI companies are facing the same existential challenge.

We're already seeing the cracks. Anthropic charges $200 monthly for Claude Pro, yet still caps usage at 5 hours when servers are busy. This pricing squeezes out many users while frustrating paying customers—a lose-lose scenario that's unsustainable long-term.

The industry is realizing that their "best model to market" strategy may be backwards. It might be more profitable to sell premium models exclusively to large enterprise clients while offering lighter, less server-intensive models to consumers.

The Great Awakening: Cost vs. Benefit

People are getting smarter about AI. The initial novelty is wearing off, and users are starting to ask hard questions about whether the costs justify the benefits. For many, this will become a simple affordability question.

Meanwhile, the emergence of free AI development tools and funny usess for them like "AI sh*tbots" is driving tech-savvy users toward DIY solutions. Why pay $200 a month when you can run your own model on an old laptop or home server?

The Open-Source Renaissance

This brings us to what I believe will be the real game-changer: the continued growth of open-source AI technology. While corporate AI companies struggle with monetization, open-source projects are positioned to outpace them entirely.

Historically, open-source projects have relied on passionate communities but often stagnate when life gets in the way of volunteer maintainers. Here's where it gets interesting: tech-savvy individuals can now use custom AI agents to help with their open-source projects. A single developer can effectively become a team of 2-3, with AI handling the most time-consuming aspects like debugging.

The Coming Flip

All these factors are converging toward what I call "the AI flip." We'll see an explosion of free, community-driven alternatives. Enterprises will continue paying premium prices to AI giants, but consumers will migrate toward homemade solutions and open-source tools.

Take my recent experience setting up a YUNOHOST server on a mini-PC. What should have taken me a week of wrestling with networking documentation was completed in a day with Claude's help. The AI shortened my install time by at least three days—it was genuinely transformative.

But here's the key insight: Claude didn't have to be Claude to help me. As I become more self-sufficient, AI increasingly functions as a very sophisticated search engine rather than a premium service I need to subscribe to.

The Democratization Vision

This leads to my broader vision: a world where everyone—from plumbers to dentists—can use no-code solutions and open-source tools to run their businesses, install software, and create technology. We're already seeing this with platforms like Figma, Framer, and Wix, which enable non-engineers to accomplish tasks that previously required teams of specialists with advanced degrees.

We're approaching the second wave of AI—one built on community interaction rather than corporate gatekeeping. Never in human history have we been able to bring software and non-software developers together to create solutions at this scale.

The bust is coming, but it's not an ending. It's a reset that will democratize AI and put the power back in the hands of communities and individuals. The real AI revolution is just getting started.