AI Hype, Investment Bubbles & Transformative Potential
A short Q&A
I’m often asked whether I think the AI bubble is about to burst.
I think it’s worth separating out a few related but distinct dimensions that are often conflated under the bubble heading - hype, investment and transformative potential - and answering some straightforward questions about each.
Q: Have some of the short-term impacts of AI been overstated?
A: Yes. Contrary to hyperbolic claims on X, AI has not just killed Google/Excel/PowerPoint/the music industry/coders/marketers/graphic designers/filmmakers. Instead, it has unlocked different approaches in those domains that enable new entrants and that incumbents will most likely adopt or - in smaller number - attempt to differentiate by rejecting.
Q: Are most people still underestimating the longer-term impacts of AI?
A: Yes. Even were there no further breakthroughs in AI (spoiler: there will be), the long term implications of the breakthroughs of the last few years will be profound and take many years to play out. We’ve still mostly got raw ingredients and have only begun to scratch the surface of what those new ingredients will enable us to create, much like the early days of the internet.
Q: Will most investors see a near-term return on their AI-related investments?
A: No. As with most tech-related investments, there’ll be lots of losers and a few winners. The current tech giants are likely to be among the winners. Their deep pockets - kept topped up by other revenue streams - allow them to keep throwing ideas at the wall. They also have a track record of pinching winning ideas from the market and plumbing them into their massive product portfolios (see Apple’s recent sherlocking of Partiful).
Q: Is the AI investment bubble about to burst?
A: A single giant burst is less likely than a number of smaller adjustments based on reappraisals of how well positioned companies within different layers of the AI stack are to deliver significant returns (as happened with AI model providers/chip developers in response to DeepSeek’s recent releases).
Q: Can all businesses and individuals get meaningful efficiency/productivity/creativity gains from making judicious use of AI now?
A: Yes. While the current impact of AI varies by domain, I believe every business and individual willing to explore its potential will find some immediate term benefits.
Q: Will thinking about and experimenting with AI now help me in the future?
A: Yes. There isn’t a scenario in which it won’t be helpful to better understand AI and to have explored how it might impact your life and work.
Q: How should my company be approaching AI adoption right now?
A: With curiosity and measured experimentation - not panic, blind adoption or wholesale rejection. Get some clear, accessible guidelines in place that enable teams to confidently experiment and work out where AI can currently add value. Invest in your team’s understanding of AI (I can help with this*). The people best placed to work out where AI can add value are you and your teams (with the right tools, training & time).
*I help organisations cut through the AI hype and unlock value through keynotes, policy development, hands-on training, and practical experimentation. Drop me a line at mail@dantaylorwatt.com.