Thread by @thegrahamcooke

A Chinese company just shattered OpenAI's $18 billion advantage:

They proved you can build ChatGPT-level AI for 100x cheaper.

And it's about to trigger the biggest market crash since the dot-com bubble.

Here's why the Chinese are keeping this a secret:

For the past 5 years, the AI industry has been built on one core assumption:

Building powerful AI requires massive resources.

Huge data centers. Thousands of engineers. Billions in funding.

That assumption just got shattered:

OpenAI has raised $18 billion.

They've built some of the world's most advanced data centers, hired the brightest minds, and spent years perfecting their models.

All based on the belief that this was the only way forward.

But something just changed everything:

A new AI model has matched their performance at a fraction of the cost.

Not just marginally cheaper.

We're talking about an order of magnitude reduction in what it takes to build world-class AI.

This isn't just disruption - it's an extinction event.

China knows this, that's why DeepSeek just restricted registration to mainland China mobile numbers only.

To understand why, we need to look back at the dot-com crash of 2000.

History doesn't repeat itself...it rhymes.

Companies spent hundreds of billions laying fiber optic cables under oceans. This is remarkably similar to what happened with GPU's in the 2000's.

They built enough infrastructure to handle 50 years of internet traffic growth.

Everyone was convinced this was the future:

But they made a crucial miscalculation:

The infrastructure far outpaced actual demand.

Companies like Webvan built billion-dollar warehouses, assuming everyone would instantly start buying groceries online.

They were right about the trend, but catastrophically wrong about timing.

That is a universal law of disruptive technology - eventually, supply exceeds demand and the cycle resets:

When reality hit, it was brutal:

• Stock prices collapsed
• Companies went bankrupt
• Trillions in value vanished

Today's AI boom is following the exact same pattern, but the numbers are even more shocking:

Sequoia predicts the AI industry needs $600 billion in revenue to justify current investments.

We're at just 10% of that today.

This isn't just a gap - it's a chasm between expectation and reality.

And now comes the catalyst that brings it all down:

This breakthrough in efficient AI development proves something stunning:

Most of the massive infrastructure being built right now is unnecessary.

Think about the implications:

• Billions in data centers? Overkill
• Massive hardware investments? Wasteful
• Current AI valuations? Pure fantasy

Here's why this changes everything:

The entire economic model of the AI industry is built on scarcity:

"Only a few companies can afford to build powerful AI."

That scarcity just vanished.

And when artificial scarcity disappears, bubbles pop:

Just like the internet in 2000, AI is about to enter its "trough of disillusionment."

Not because the technology doesn't work.

But because we've built an entire industry on assumptions that are no longer true.

History tells us what happens next:

After the dot-com crash, something fascinating happened:

While the media declared the internet "dead," the real revolution began quietly.

Amazon wasn't building unnecessary infrastructure.

They were solving real problems for customers:

The same transformation is coming to AI.

Web4 will emerge from the ashes, built on fundamentally different principles:

• Efficient, affordable AI models
• Decentralized infrastructure
• Natural human interfaces
• Value from data quality, not brute force compute

This reshapes the entire landscape:

The winners won't be who you expect.

Just like Amazon understood retail better than understood pets...

The next AI giants will be built by people who understand real human needs.

Three massive shifts are already beginning:Pets.com

1. Edge Computing Over Cloud:
AI moves from massive data centers to local devices, bringing privacy and speed

2. Data Quality Over Size:
Better data beats bigger models

3. Practical Uses Over Demos:
Solving real problems beats impressive parlor tricks

The smart money sees this coming:

We're witnessing a pivotal moment in tech history.

The AI bubble will burst.

But just like the internet after 2000, what comes next will be far more revolutionary than anyone expects.

Thanks for reading! - you're awesome!

Follow me @thegrahamcooke for more.

Like/Repost the quote below if you benefited:

A bit more about me!

I'm Graham.

Author, innovator, entrepreneur, and one of the first European employees at Google. I built products with them that generated over $2B+ in revenue.

Currently working on @bravaxyz for effortless, secure, stablecoin yields, on autopilot.

Video credits:
• YT link youtube.com/watch?v=rcIqrT…
• YT link youtube.com/watch?v=VdACzw…
• YT link youtube.com/watch?v=-2k1rc…
• YT link youtu.be/iUHMnVIvGI8?si…
• YT link youtu.be/WEBiebbeNCA?si…
• YT link youtube.com/watch?v=Nib5ye…