Why AGI Will Not Happen

If you are reading this, you probably have strong opinions about AGI, superintelligence, and the future of AI. Maybe you believe we are on the cusp of a transformative breakthrough. Maybe you are skeptical. This blog post is for those who want to think more carefully about these claims and examine them from a perspective that is often missing in the current discourse: the physical reality of computation.

I have been thinking about this topic for a while now, and what prompted me to finally write this down was a combination of things: a Twitter thread, conversations with friends, and a growing awareness that the thinking around AGI and superintelligence is not just optimistic, but fundamentally flawed. The purpose of this blog post is to address what I see as very sloppy thinking, thinking that is created in an echo chamber, particularly in the Bay Area, where the same ideas amplify themselves without critical awareness. This amplification of bad ideas and thinking exhuded by the rationalist and EA movements, is a big problem in shaping a beneficial future for everyone. Realistic thought can be used to ground where we are and where we have to go to shape a future that is good for everyone.

I want to talk about hardware improvements, AGI, superintelligence, scaling laws, the AI bubble, and related topics. But before we dive into these specific areas, I need to establish a foundation that is often overlooked in these discussions. Let me start with the most fundamental principle.

Computation is Physical

A key problem with ideas, particularly those coming from the Bay Area, is that they often live entirely in the idea space. Most people who think about AGI, superintelligence, scaling laws, and hardware improvements treat these concepts as abstract ideas that can be discussed like philosophical thought experiments. In fact, a lot of the thinking about superintelligence and AGI comes from Oxford-style philosophy. Oxford, the birthplace of effective altruism, mixed with the rationality culture from the Bay Area, gave rise to a strong distortion of how to clearly think about certain ideas. All of this sits on one fundamental misunderstanding of AI and scaling: computation is physical.

For effective computation, you need to balance two things. You need to move global information to a local neighborhood, and you need to pool multiple pieces of local information to transform old information into new. While the complexity of local computation is virtually constant — much accelerated by smaller transistors — movement scales quadratically with distance to local computation units. While memory movement also benefits from smaller transistors, improvements become quickly sublinear due to the squared nature of memory access patterns.

This is most easily seen by looking at cache hierarchies. L1, L2 and L3 cache are physically the same technology, but computationally they are very different. L2 and L3 are much larger than L1, but they are also much slower. This is because L2 and L3 are further away, physically, from the computational core, and memory lookups need to traverse a longer distance due to the physical size. 

Two ideas to remember: First, larger caches are slower. Second, as we get smaller and smaller transistors, computation gets cheaper, but memory becomes more expensive, relatively speaking. The fraction of silicon area dedicated to memory on a chip has increased over time to the point where now computational elements on a chip are trivial in proportion. Almost all area is allocated to memory. In other words, if you want to produce 10 exaflops on a chip, you can do that easily — but you will not be able to service it with memory, making it useless FLOPS (the NVIDIA marketing department is good at ignoring this fact). All of this makes AI architectures like the transformer fundamentally physical. Our architectures are not abstract ideas that can be developed and thrown around carelessly. They are physical optimizations of information processing units.

To process information usefully, you need to do two things: compute local associations (MLP) and pool more distant associations to the local neighborhood (attention). This is because local information alone only helps you to distinguish closely related information, while pooling distant information helps you to form more complex associations that contrast or augment local details. The transformer is one of the most physically efficient architectures because it combines the simplest ways of doing this local computation and global pooling of information. The global pooling of information might be made more effective through research, and there is still active investigation going on that I think might be promising, but it has diminishing returns — the transformer architecture is close to physically optimal.

Computation is physical. This is also true for biological systems. The computational capacity of all animals is limited by the possible caloric intake in their ecological niche. If you have the average calorie intake of a primate, you can calculate within 99% accuracy how many neurons that primate has. Humans invented cooking, which increased the physically possible caloric intake substantially through predigestion. But we reached the physical limits of intelligence. When women are pregnant, they need to feed two brains, which is so expensive that physically, the gut cannot mobilize enough macronutrients to keep both alive if our brains were bigger. With bigger brains, we would not be able to have children — not because of the birth canal being too small, but because we would not be able to provide enough energy — making our current intelligence a physical boundary that we cannot cross due to energy limitations.

We are close to reaching the same limits for digital computation.

Linear Progress Needs Exponential Resources

There have been studies about progress in all kinds of fields that come to the same conclusion: linear progress needs exponential resources. What does that mean? If you want to improve a system further and further, make it more precise, or improve its efficiency, you need exponentially more resources with any improvement that you make. This is true for all kinds of fields and problems being investigated, and it is pretty clear why.

There are two realities at play here: one physical and one in the idea space. In the physical reality, if you need to accumulate resources in time and space to produce an outcome, then for logistical reasons, the overall effect that is locally produced needs linear resources to produce a linear outcome. But because of physicality and because matter takes up space, those resources can only be pooled at an increasingly slowing rate due to contention in space or time.

In the idea space, there is a similar phenomenon, which is less obvious. If two ideas are completely independent, they can have an effect that is ten times larger than any single idea. But if ideas are related, then the overall impact is limited due to diminishing returns — the ideas are just too correlated. If an idea builds on another, it can only be so much better. Often, if there is a dependency between ideas, one is a refinement of the other. Refinements, even if they are extremely creative, will yield incremental improvements. If a field is large enough, even if one tries to work on very different ideas, they are still heavily related to previous ideas. For example, while state-based models and Transformers seem like very different approaches to attention, they concentrate on the same problem. Very minimal gains can be achieved through any idea that modifies attention in these ways.

These relationships are most striking in physics. There was a time when progress could be made by individuals – not so much anymore.

I talked to a top theoretical physicist at a top research university, and he told me that all theoretical work in physics is, in some sense, either incremental refinement or made-up problems. The core problem of the idea space is this: if the idea is in the same sub-area, no meaningful innovation is possible because most things have already been thought. A first urge is to look for wildy creative ideas, but the problem is that are still bound by the rules of that subspace that often exist for a very good reason (see graduate-student-theory-of-everything-phenomenon). So the theoretical physicist faces only two meaningful choices: refine other ideas incrementally, which leads to insignificant impact; or work on rule-breaking unconventional ideas that are interesting but which will have no clear impact on physical theory.

The experimental physics demonstrates the physical limitations. The experiments that test more and more fundamental laws of physics and constituent particles — in other words, the standard model — become increasingly expensive. The standard model is incomplete, and we do not know how to fix it. Higher energies at the Large Hadron Collider have only led to more inconclusive results and the ruling out of more theories. We have no understanding of what dark energy or dark matter is, even though we build increasingly complex experiments that cost billions of dollars. The reality might be that certain aspects of physics are unknowable, hidden by complexity that cannot be attained with the resources that we can muster. 

If you want to get linear improvements, you need exponential resources.

GPUs No Longer Improve

One of the most common misconceptions I see is that people assume hardware keeps improving and improving. This is an important misconception that explains a lot of the poor thinking around AI progress. The efficiency of GPUs has driven almost all innovation in AI. AlexNet was only possible by developing one of the first CUDA implementations that could compute convolutions over networked GPUs. Further innovation was mostly possible through improved GPUs and using more GPUs. Almost everybody sees this pattern — GPUs improve, AI performance improves — and it is easy to think that GPUs will improve further and will continue to improve AI outcomes. Every generation of GPUs has been better, and it would seem foolish to think that it will stop. But actually, it is foolish to think that GPUs will continue to improve. In fact, GPUs will no longer improve meaningfully. We have essentially seen the last generation of significant GPU improvements. GPUs maxed out in performance per cost around 2018 — after that, we added one-off features that exhaust quickly.

The first of these one-off features was 16-bit precision, then Tensor Cores, or the equivalent, then high-bandwidth memory (HBM),then the TMA or equivalent,  then 8-bit precision, then 4-bit precision. And now we are at the end, both in the physical and the idea space. I have shown in my paper about k-bit inference scaling laws what data types with particular block sizes and computational arrangements are optimal. This has already been adopted by hardware manufacturers. Any further improvement will lead not to straightforward improvements but to trade-offs: either better memory footprint at lower computational efficiency or higher computational throughput at higher memory footprint. Even if you can innovate – linear improvements, need exponential resources – further improvements will be trivial and will not add any meaningful advancement.

While GPUs can no longer improve meaningfully, rack-level optimizations are still critically important. Efficient shuttling of key-value caches is one of the most important problems in AI infrastructure. The current solution to this problem, however, is also relatively straightforward. Companies like OpenAI boast about their AI infrastructure, but it is relatively simple to design because there is essentially only one optimal way to design it. And while it is complex to implement, it just needs clear thinking and mostly hard, time-intensive engineering. But the overall system design is not particularly novel. OpenAI – or other frontier labs – have no fundamental advantage in their inference and infrastructure stacks. The only way to gain an advantage is by having slightly better rack-level hardware optimizations or data-center-level hardware optimizations. But these will also run out quickly – maybe 2026, maybe 2027.

Why Scaling Is Not Enough

In my Twitter thread, I talked about how Gemini might signal a plateau in AI progress in the sense that we might not see meaningful improvements anymore. A lot of people responded with something along the lines of, “You are being too pessimistic. Can you not see that scaling works?” The point here is a bit more subtle, so I want to elaborate. 

I believe in scaling laws and I believe scaling will improve performance, and models like Gemini are clearly good models. The problem with scaling is this: for linear improvements, we previously had exponential growth as GPUs which canceled out the exponential resource requirements of scaling. This is no longer true. In other words, previously we invested roughly linear costs to get linear payoff, but now it has turned to exponential costs. That would not be a problem on its own, but it sets a clear physical limit on scaling that is rapidly approaching. We have maybe one, maybe two more years of scaling left because further improvements become physically infeasible. The scaling improvements in 2025 were not impressive. Scaling in 2026 and 2027 better work out better.

Despite these exponential costs, the current infrastructure build-out is reasonable, particularly with the growth of inference use, but it still creates a very precarious balance. The biggest problem is this: if scaling does not provide much larger improvements than research/software innovations, then hardware becomes a liability and not an asset. 

Small players like MoonshotAI and Z.ai show that they do not need many resources to reach frontier performance (I personally prefer Kimi K2-thinking over Sonnet 4.5 for coding). If these companies innovate beyond scale, they might just create the best model. While they might still use existing infrastructure, they could just switch to Huawei Ascend chips for inference, which are more than fine for providing good inference performance.

Another big threat to scale-up-infrastructure is that, currently, large-model inference efficiency is strongly related to a large user base due to network scaling. The problem is that efficient deployments of a large model needs a certain amount of GPUs to be efficient enough to overlap computation with networking and KV-cache length partitioning. Such deployments are ultra-efficient but demand a large user base to unlock full utilization and with that, cost-effectiveness. That is why open-weight models currently have not had the expected impact, because the infrastructure cost of large deployments need a large user-base. However, this problem can be solved with software.

While vLLM and SGLang currently try to optimize frontier-type deployments, they do not provide this efficiency at smaller scales. With the right inference stack beyond vLLM/SGLang, people would be able to deploy a ~300-billion-parameter model with the same efficiency as OpenAI or Anthropic deploys their frontier models. If smaller models become more capable — we see this with GLM 4.6 — or if AI applications become more specialized, the infrastructure advantage of frontier labs might vanish overnight. The software complexity evaporates, and open-source, open-weight deployments might be close to physically optimal, both in terms of computational efficiency and information processing efficiency. This is a large risk for frontier players.

Under slowing scaling, any of these three factors might degrade the value of AI infrastructure significantly and rapidly: (1) research/software innovations, (2) strong open-weight inference stacks, (3) shift to other hardware.

The current trends do not look good for frontier labs. 

Frontier AI Versus Economic Diffusion

The US and China follow two different approaches to AI. The US follows the idea that there will be one winner who takes it all – the one that builds superintelligence wins. Even coming short of superintelligence of AGI, if you have the best model, almost all people will use your model and not the competition’s model. The idea is: develop the biggest, badest model and people will come. 

China’s philosophy is different. They believe model capabilities do not matter as much as application. What matters is how you use AI. The key indicator of progress is how much AI is integrated into everything and how useful it is. If one model is better than another, it does not automatically mean it will be used more widely. What is important is that the model is useful and yields productivity gains at a reasonable cost. If the current approach is more productive than the previous one, it will be adopted. But hyper-optimization for slightly better quality is not very effective. In most cases, settling on “good enough” yields the highest productivity gain.

I think it is easy to see that the US philosophy is short-sighted and very problematic — particularly if model capability slows. The Chinese philosophy is more long-term focused and pragmatic. 

The key value of AI is that it is useful and increases productivity. That makes it beneficial. It is clear that, similarly to computers or the internet, AI will be used everywhere. The problem is that if AI were just used for coding and engineering, it would have a very limited impact. While a lot of economic activity is supported by digital programs, these also have diminishing returns, and producing more software will not improve outcomes significantly if existing software is already good enough (just look at the SAAS failure in China). This makes wide-spread economic integration absolutely vital for AI effectiveness.

So in order to provide real value, AI needs to be used in ways that provide new benefits, not just improvements to what already exists. This is a difficult problem, but the right answer is to integrate AI into everything to squeeze out non-linear improvements, see what works and what does not, then keep what is working. China is taking this approach by subsidizing applications that use AI to encourage adoption. The Chinese population is very receptive to innovation, which facilitates this process. It is nothing unusual in China to see an 80-year-old grandma use AI to help her with their daily life. The US, on the other hand, bets on ideas like AGI and superintelligence, which I believe are fundamentally flawed concepts that have little relevance to future AI progress. This becomes clear when you think carefully about what these terms actually mean in physical reality.

AGI Will Never Happen, and Superintelligence Is a Fantasy

There is this pattern I have noticed: when you ask people in the Bay Area when AGI will happen, they always say it is a few years in the future, and it will have a massive impact. Then, if you ask them what AGI actually is, they do not include any physical tasks in their definition, and they do not consider resource inputs. 

True AGI, that can do all things human, would need to be able to physical tasks – which comprises the largest economic sector. In short, AGI should include physical robots or machines that are able to do economically meaningful work in the physical world. While physical robots might be convenient for unloading your dishwasher, you will not see them replacing specialized systems in factories. Specialized robots in factories are too efficient, too precise. China demonstrates that dark factories — fully automated facilities — are already possible. Most robotics problems are solved problems in controlled environments. Most existing robotics problems that remain unsolved are also economically unviable. Stitching sleeves to a t-shirt is an unsolved robotics problem, but it is also not particularly economically meaningful in most contexts. Household robots will be interesting, but if it takes me two minutes to unload my dishwasher, I am not sure I need a robot for that. And while in a couple of years a robot might be able to fold laundry, I would rather spend a few minutes folding it myself with no creases than have a robot do a mediocre job.

The main problem with robotics is that learning follows scaling laws that are very similar to the scaling laws of language models. The problem is that data in the physical world is just too expensive to collect, and the physical world is too complex in its details. Robotics will have limited impacts. Factories are already automated and other tasks are not economically meaningful.

The concept of superintelligence is built on a flawed premise. The idea is that once you have an intelligence that is as good or better than humans — in other words, AGI — then that intelligence can improve itself, leading to a runaway effect. This idea comes from Oxford-based philosophers who brought these concepts to the Bay Area. It is a deeply flawed idea that is harmful for the field. The main flaw is that this idea treats intelligence as purely abstract and not grounded in physical reality. To improve any system, you need resources. And even if a superintelligence uses these resources more effectively than humans to improve itself, it is still bound by the scaling of improvements I mentioned before — linear improvements need exponential resources. Diminishing returns can be avoided by switching to more independent problems – like adding one-off features to GPUs – but these quickly hit their own diminishing returns. So, superintelligence can be thought of as filling gaps in capability, not extending the frontier. Filling gaps can be useful, but it does not lead to runaway effects — it leads to incremental improvements.

Furthermore, the same people who think that GPUs will infinitely improve are often the people who think superintelligence will make those improvements faster and better. But they do not realize that GPUs can no longer be meaningfully improved. We can wait for better HBM memory technology for speed, and for chiplets and advanced packaging to improve yield/cost, but that is it. Rack-level optimization will likely hit the physical wall in 2026 or 2027. A superintelligence will not accelerate the progress made in HBM development, manufacturing, testing, and integration. The transformer architecture is close to physically optimal. Superintelligence will not be able to meaningfully improve neural network architectures. Efficient large-scale deployments for inference are largely a solved engineering problem. It just needs some careful engineering and time, but very little creativity is required to solve this problem close to physical optimality. Superintelligence will not be able to improve our inference stack by much.

A superintelligence might help with economic diffusion of AI technology, but in the end, the limiting factor of economic diffusion is implementation and adoption, not capability. It is clear to me that any organization that strives primarily for superintelligence as a goal will encounter significant challenges and will ultimately falter and be displaced by players that provide general economic diffusion. 

In summary, AGI, as commonly conceived, will not happen because it ignores the physical constraints of computation, the exponential costs of linear progress, and the fundamental limits we are already encountering. Superintelligence is a fantasy because it assumes that intelligence can recursively self-improve without bound, ignoring the physical and economic realities that constrain all systems. These ideas persist not because they are well-founded, but because they serve as compelling narratives in an echo chamber that rewards belief over rigor. 

The future of AI will be shaped by economic diffusion, practical applications, and incremental improvements within physical constraints — not by mythical superintelligence or the sudden emergence of AGI. The sooner we accept this reality, the better we can focus on building AI systems that actually improve human productivity and well-being.