Is an ‘AI winter’ coming? Here’s what investors and leaders can learn from past AI slumps

The first AI hype cycle

Government loses faith

Winter No. 2: Business loses patience

Winter No. 3: The rise and fall (and rise) of neural networks

Jeremy Kahn is the AI editor at Fortune, spearheading the publication's coverage of artificial intelligence. He also co-

As summer fades into fall, many in the tech world are worried about winter. Late last month, a Bloomberg columnist asked “is the AI winter finally upon us?” British newspaper The Telegraph was more definitive. “The next AI winter is coming,” it declared. Meanwhile, social media platform X was filled with chatter about a possible AI winter.An “AI winter” is what folks in artificial intelligence call a period in which enthusiasm for the idea of machines that can learn and think like people wanes—and investment for AI products, companies, and research dries up. There’s a reason this phrase comes so naturally to the lips of AI pundits: We’ve already lived through several AI winters over the 70-year history of artificial intelligence as a research field. If we’re about to enter another one, as some suspect, it’ll be at least the fourth.The most recent talk of a looming winter has been triggered

The markets have been spooked recently

A look at past AI winters, and what caused them, may give us some indication of whether that chill in the air is just a passing breeze or the first hints of an impending Ice Age. Sometimes those AI winters have been brought on

The U.S. and allied governments lavishly funded artificial intelligence research throughout the early days of the Cold War. Then, as now, Washington saw the technology as potentially conferring a strategic and military advantage, and much of the funding for AI research came from the Pentagon.During this period, there were two competing approaches to AI. One was based on hard-coding logical rules for categorizing inputs into symbols and then for manipulating those symbols to arrive at outputs. This was the method that yielded the first great leaps forward in computers that could play checkers and chess, and also led to the world’s first chatbots. 

The rival AI method was based on something called a perceptron, which was the forerunner of today’s neural networks, a kind of AI loosely built on a caricature of how the brain works. Rather than starting with rules and logic, a perceptron learned a rule for accomplishing some task from data. The U.S. Office of Naval Research funded much of the early work on perceptrons, which were pioneered

But what precipitates an AI winter is some definitive evidence this hype cannot be met. For the first AI winter, that evidence came in a succession of blows. In 1966, a committee commissioned

It turned out there was a big problem with Minsky’s and Papert’s critique. While most interpreted the book as definitive proof that neural network-based AI would never come close to human-level intelligence, their proofs applied only to a simple perceptron that had just a single layer: an input layer consisting of several neurons that took in data, all linked to a single output neuron. They had ignored, likely deliberately, that some researchers in the 1960s had already begun experimenting with multilayer perceptrons, which had a middle “hidden” layer of neurons that sat between the input neurons and output neuron. True forerunners of today’s “deep learning,” these multilayer perceptrons could, in fact, classify data into more than two categories. But at the time, training such a multilayer neural network was fiendishly difficult. And it didn’t matter. The damage was done. After the publication of Minsky’s and Papert’s book, U.S. government funding for neural network-based approaches to AI largely ended.Minsky’s and Papert’s attack didn’t just persuade Pentagon funding bodies. It also convinced many computer scientists too that neural networks were a dead end. Some neural network researchers came to blame Minsky for setting back the field

Lighthill had only looked at U.K. AI efforts, but DARPA and other U.S. funders of AI research took note of its conclusions, which reinforced their own growing skepticism of AI.

That first AI winter thawed in the early 1980s thanks largely to increases in computing power and some improved algorithmic techniques. This time, much of the hype in AI was around “expert systems”. These were computer programs that were designed to encode the knowledge of human experts in a particular domain into a set of logical rules which the software would then apply to accomplish some specific task.Nevertheless, business was enthusiastic, believing expert systems would lead to a productivity boom. At the height of this AI hype cycle, nearly two-thirds of the Fortune 500 said they had deployed expert systems.

Although expert systems drew on many of the methods symbolic AI researchers pioneered, many academic computer scientists were wary that inflated expectations would once again precipitate a boom and bust cycle that would hurt the field. Among them were Minsky and fellow AI researcher Roger Schank who coined the term “AI winter” during an AI conference in 1984. The pair chose the neologism to echo the term “nuclear winter”—the devastating and bleak period without sunlight that would likely follow a major nuclear war.Three things then happened to bring about the next winter. In 1987, a new kind of computer workstation debuted from Sun Microsystems. These workstations, as well as increasingly powerful desktop computers from IBM and Apple, obviated the need for specialized LISP machines. Within a year, the market for LISP machines evaporated. Many venture capitalists lost their shirts—and became wary of ever backing AI-related startups again. That same year, New York University computer scientist Jack Schwartz became head of DARPA’s computing research. He was no fan of AI in general or expert systems in particular, and slashed funding for both. 

Meanwhile, businesses gradually discovered that expert systems were difficult and expensive to build and maintain. They were also “brittle”—while they could handle highly routinized tasks well, when they encountered slightly unusual cases, they struggled to apply the logical rules they had been given. In such cases, they often produced bizarre and inaccurate outputs, or simply broke down completely. Delineating rules that would apply to every edge case proved an impossible task. As a result,

Again there are some clear echoes in what’s happening with AI today. For instance, hundreds of billions of dollars are being invested in AI datacenters being constructed

The 1980s also saw renewed interest in the other AI method, neural networks, due in part to the work of David Rumelhart, Geoffrey Hinton and Ronald Williams, who in 1986 figured out a way to overcome a key challenge that had bedeviled multilayered perceptrons since the 1960s. Their innovation was something called backpropagation, or backprop for short, which was a method for correcting the outputs of the middle, hidden layer of neurons during each training pass so that the network as a whole could learn efficiently.

Backprop, along with more powerful computers, helped spur a renaissance in neural networks. Soon researchers were building multilayered neural networks that could decipher handwritten letters on envelopes and checks, learn the relationships between people in a family tree, recognize typed characters and read them aloud through a voice synthesizer, and even steer an early self-driving car, keeping it between the lanes of a highway.This led to a short-lived boom in neural networks in the late 1980s. But neural networks had some big drawbacks too. Training them required a lot of data, and for many tasks, the amount of data required just didn’t exist. They also were extremely slow to train and sometimes slow to run on the computer hardware that existed at the time.This meant that there were many things neural networks could still not do. Businesses did not rush to adopt neural networks as they had expert systems because their uses seemed highly circumscribed. Meanwhile, there were other statistical machine learning techniques that used less data and required less computing power that seemed to be making rapid progress. Once again, many AI researchers and engineers wrote off neural networks. Another decade-long AI winter set in.Two things thawed this third winter: the internet created vast amounts of digital data and made accessing it relatively easy. This helped break the data bottleneck that had held neural networks back in the 1980s. Then, starting in 2004, researchers at the University of Maryland and then Microsoft began experimenting with using a new kind of computer chip that had been invented for video games, called a graphics processing unit, to train and run neural networks. GPUs could perform many of the same operations in parallel, which is what neural networks required. Soon, Geoffrey Hinton and his graduate students began demonstrating that neural networks, trained on large datasets and run on GPUs, could do things—like classify images into a thousand different categories—that would have been impossible in the late 1980s. The modern “deep learning” revolution was taking off.That boom has largely continued through today. At first, neural networks were largely trained to do one particular task well—to play Go, or to recognize faces. But the AI summer deepened in 2017, when researchers at Google designed a particular kind of neural network called a Transformer that was good at figuring out language sequences. It was given another boost in 2019 when OpenAI figured out that Transformers trained on large amounts of text could not only write text well, but master many other language tasks, from translation to summarization. Three years later, an updated version of OpenAI’s transformer-based neural network, GPT-3.5, would be used to power the viral chatbot ChatGPT.

Now, three years after ChatGPT’s debut, the hype around AI has never been greater. There  are certainly a few autumnal signs, a falling leaf carried on the breeze here and there, if past AI winters are any guide. But only time will tell if it is the prelude to another Arctic bomb that will freeze AI investment for a generation, or merely a momentary cold-snap before the sun appears again.