When the AI Bubble Bursts, What Will Survive

The AI bubble may burst. But that does not mean artificial intelligence will disappear.

Stability AI has already shown us what this kind of crash can look like. The company behind the release of Stable Diffusion planned roughly $99 million in computing costs against only $11 million in projected sales. When cash ran low, cloud bills went unpaid, debt accumulated and key researchers left. Yet the model survived, the knowledge moved with its creators and a new company emerged.

This documentary separates the price of AI from the technology itself. We follow Stability AI’s financial crisis, Robin Rombach’s move to Black Forest Labs, the rise of FLUX and the lesson of the dot-com crash: investors can lose fortunes while the infrastructure they financed continues to reshape the world.

The companies, valuations and subscriptions may change. The trained models and the people who understand them will not simply vanish. And for millions of workers — including the Philippines’ enormous outsourcing industry — the morning after the crash may matter more than the crash itself.

Subscribe to Downfall Dossier for cinematic, evidence-based stories about the decisions, systems and people behind the rise and collapse of business empires.

Chapters:

The supplied English narration is 11:18 long, but the final edited video timeline was not supplied. Add exact chapter timestamps after the final export using these chapter names:

Light
The Bill
A New Address
The Cable
The Morning After
#AIBubble #StabilityAI #BusinessHistory

Sources and further reading:

Forbes — How Stability AI’s Founder Tanked His Billion-Dollar Startup: https://www.forbes.com/sites/kenrickcai/2024/03/29/how-stability-ais-founder-tanked-his-billion-dollar-startup/
Data Center Dynamics — Stability AI’s debts to AWS, Google Cloud and CoreWeave: https://www.datacenterdynamics.com/en/news/stability-ai-defaulted-on-payments-to-aws-owed-google-cloud-and-coreweave/
Reuters — rescue financing, new leadership and debt restructuring: https://www.reuters.com/technology/artificial-intelligence/cash-strapped-stability-ai-raises-80-mln-with-new-ceo-board-2024-06-25/
Reuters — Stability AI’s cash crisis and losses: https://www.reuters.com/markets/deals/stability-ai-discusses-sale-amid-cash-crunch-information-reports-2024-05-16/
CompVis — Stable Diffusion’s research origins: https://github.com/CompVis/stable-diffusion
Black Forest Labs — official $300 million Series B announcement: https://bfl.ai/blog/our-300m-series-b
Stability AI — James Cameron joins the board: https://stability.ai/news-updates/james-cameron-joins-stability-ai-board-of-directors
Federal Reserve History — the Great Recession and housing crash: https://www.federalreservehistory.org/essays/great-recession-and-its-aftermath
Cloudflare — the difference between AI training and inference: https://www.cloudflare.com/learning/ai/inference-vs-training/
GMA News — Philippine IT-BPM revenue and employment forecasts: https://www.gmanetwork.com/news/money/economy/994797/ibpap-cuts-2028-it-bpm-revenue-jobs-forecasts-after-roadmap-review/story/