The LLM Bubble Is Bursting — Provenance Will Define the Next Decade of AI
Smart leaders are shifting from black-box models to verifiable, expert-grounded intelligence.
Over the past two years, the hype around artificial intelligence has reached a fever pitch. Yet the signal cutting through the noise is becoming unmistakable: we are not in an AI bubble — we are in an LLM bubble. Even the CEO of Hugging Face said as much recently when discussing the overheated market dynamics around large models, compared to the broader field of AI innovation.1
That distinction matters for one simple reason: the future will not be defined by “bigger models.” It will be defined by transparent, verifiable, provenance-rich intelligence that leaders can trust — and defend.
This shift isn’t theoretical. It’s happening right now.
And the smartest public and private sector organizations are already aligning with it.
Opaque Intelligence Is the Real Risk — Not AI Itself
I’ve spent years working across cybersecurity, IAM, and now AI and verified intelligence. And one pattern is becoming clear: as organizations begin laying the foundations of their AI strategy, the choices they make in 2026 will have long-term consequences. Many are exploring GenAI and LLM tools without fully understanding the short- and long-term risks these systems can introduce to their P&L, operational resilience, and decision quality.
This is the moment where leaders must decide whether to build on opaque, probabilistic tools—or on transparent, verifiable intelligence they can trust, audit, and defend. The organizations who pause to consider provenance, lineage, and accountability now will avoid painful redesign later and position themselves for durable, compounding productivity gains.
A human in the loop doesn’t fix this.
You can’t “review” what you can’t see.
If the system cannot show:
Its reasoning path
Its underlying sources
Its version footprint
Its inference chain
Or whether it hallucinated
…then you own the outcome but you don’t own the evidence.
Opaque AI becomes a governance liability.
And regulators are beginning to say so out loud.
The Regulatory Wave Has Begun — Transparency Is Becoming Law
A growing set of U.S. states are taking decisive steps toward transparency, documentation, and proof of AI influence.
Washington’s HB 1170 — A Major Leap Forward in Transparency
As I wrote in AI Transparency 2.0: Why Washington Must Go Beyond Deepfakes to Decision Provenance, Washington State’s HB 1170 puts real stakes in the ground: citizens must be informed when AI influences decisions, and organizations must maintain records of how that intelligence was used.
This mirrors the same foundation seen in California’s early AI Transparency Act — and signals where nationwide policy is headed.
Colorado’s SB 24-205 — The Strongest AI Governance Law to Date
Colorado’s SB 24-205, enacted in 2024, establishes mandatory risk assessments, notices, governance controls, and documentation requirements for “high-risk” AI systems.2
This is the most comprehensive state-level AI law in the country, and it’s already influencing other states’ drafts.
Illinois HB 3773 — You Can’t Hide AI in Hiring Decisions
Illinois took a direct aim at algorithmic opacity by requiring disclosures and fairness documentation for any AI used in employment decisions starting in 2026.3
Illinois’ HB 3773 amends the state’s Human Rights Act to regulate the use of AI in employment decisions, prohibiting its use if it has a discriminatory effect based on protected classes and requiring employers to notify employees when AI is used in hiring, promotion, or other employment decisions. The law takes effect January 1, 2026, and also prohibits the use of zip codes as a proxy for protected classes in employment contexts.
The era of black-box algorithmic hiring is ending.
California’s AI Transparency Act — A Modern Benchmark for Disclosure
California’s new AI Transparency Act4 sets one of the clearest expectations in the country: organizations must disclose when AI is used in customer-facing or citizen-facing interactions, and they must maintain documentation that explains how automated decisions are generated. The Act goes beyond simple labeling—it requires organizations to preserve evidence of AI influence, enabling regulators and affected individuals to understand how and why an automated outcome occurred.
It signals a broader trend: transparency is no longer optional. It is fast becoming the baseline requirement for any organization deploying AI in high-impact contexts.
New York, Connecticut, and Massachusetts are following similar paths with draft frameworks focused on transparency and algorithmic accountability.
The direction is unified:
AI cannot be used for autonomous decision-making unless it operates with full transparency, provenance, and explainability.
This is no longer an abstract ethical debate.
It is becoming a regulatory and operational reality.
There Is No AI Bubble — The LLM Bubble Is What’s Bursting
The market is now recognizing what many of us working on verified intelligence have known for years:
The bigger the model, the bigger the opacity
The bigger the opacity, the bigger the liability
And the bigger the liability, the smaller the strategic value
Look across industries: leaders are no longer asking “How do we get more AI?”
They’re asking:
“How do we trust what we’re using?”
Large language models aren’t dying — but their unverifiable use cases are.
As the Hugging Face CEO noted, the bubble is around LLMs specifically — not the broader field of AI innovation where transparency, interpretability, and provenance are core requirements.
That’s where the future is heading.
Quickly.
Verified Intelligence: What Comes After the LLM Bubble
I believe the next decade of AI will be defined by a new standard:
AI systems must be able to answer four questions with absolute clarity:
Where did this intelligence come from?
Whose expertise, data, and boundaries informed it?
What reasoning steps produced the answer?
Can we recreate the decision and prove its integrity?
Generic LLMs can answer none of these.
Verified intelligence systems can answer all of them.
This is why we built Identient’s marketplace around provenance, data lineage, identity-attached digital twins, and full auditability.
Because trust doesn’t come from bigger models — it comes from verifiable ones.
And it turns out that when you remove ambiguity, a second benefit emerges:
The Strategic Advantage:
10X Faster Alignment With 1/10th the Effort
Once you eliminate the ambiguity created by black-box systems, something remarkable happens:
Alignment accelerates
Decision cycles shrink
Rework disappears
Shadow expertise consolidates
Dependency on expensive consultants is minimized
And the organization begins operating with shared clarity
Verified intelligence doesn’t just reduce risk — it creates leverage.
It allows leaders to move faster because they can prove the integrity of their decisions.
This is what separates the companies that are merely adopting AI from those that will define the next decade.
Next Steps
If you’re interested in provenance, lineage, and transparency — Let’s Talk
At Identient, we love partnering with organizations who understand where the world is heading.
Companies building AI with:
Traceability
Transparency
Verifiable expertise
Auditability
And human-owned intelligence
Those are the leaders who will outperform the rest of the market — not because they “used more AI,” but because they used trusted AI.
If that’s you, let’s chat.
We’d love to build the future with you.
Lorang, K. (2025, November 18). Hugging Face CEO says we’re in an “LLM bubble,” not an AI bubble. TechCrunch. https://techcrunch.com/2025/11/18/hugging-face-ceo-says-were-in-an-llm-bubble-not-an-ai-bubble/
Colorado General Assembly. (2024). SB 24-205: Consumer Protections for Artificial Intelligence Systems. https://leg.colorado.gov/bills/sb24-205
State of Illinois. (2024). HB 3773: Amendments to the Illinois Human Rights Act for AI in Employment Decisions. https://www.ilga.gov/Legislation/BillStatus?GAID=17&DocNum=3773&DocTypeID=HB&LegId=0&SessionID=112
California Office of the Governor. (2025, September 29). Governor Newsom signs SB-53, advancing California’s world-leading artificial intelligence industry. https://www.gov.ca.gov/2025/09/29/governor-newsom-signs-sb-53-advancing-californias-world-leading-artificial-intelligence-industry/