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The State of the AI Economy

The article analyzes the current state of the AI economy, examining key trends, market dynamics, and the economic impact of artificial intelligence technologies across various sectors.

Background

From Exponential View, Azeem Azhar's newsletter for executives and investors tracking tech-driven economic change. The AI boom started with ChatGPT's 2022 launch, triggering massive investment in LLMs, Nvidia chips, and data centers. Central debate: real economic transformation vs. hype bubble. The industry's core assumption — "scaling laws" (bigger models + more data = smarter AI) — is showing diminishing returns, pushing firms toward reasoning models and inference-time compute. The piece maps the shift from building models to using them as the growth driver, chip geopolitics, and the rise of sovereign AI projects worldwide.

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