There's a third possibility: slop driven productivity declines as people realize they took a wrong turn.
Which makes me wonder: what is the best 'huge AI bust' trade?
LLMs are a force multiplier. Clueless people will be able to produce tons of code that looks convincing but is totally misguided and misinformed. Exactly what large companies with complex in-house systems doesn't really need any more of.
There probably isn't one. Sure you can be bold and try to short something, but the market can be irrationel longer than you can stay solvent.
Also the big tech stocks are inflated. But they have been for years and unlike dotcom there is some tangible value behind them.
I think maybe the sane thing to do is reduce tech stocks exposure and go into index funds. But that's always the answer, so that's cheating :)
Things that will lose the most if we get Super AGI?