There is a ton of buzz around the idea that we are in an "AI Bubble", that the technology has benefited from undeserved hype and that both consumer and investor focus on the space will fade over time as it has with technologies like Crypto, the Metaverse and a slew of others.

But the reality is that the early hype around the technology may have set unrealistic expectations for the space, and it is highly likely that many people are looking in the wrong places for signals that would help us understand the foundational shift that AI is driving across all aspects of society.

• Sustained usage is being driven by younger demographics – Recent Google trends research shows that higher ChatGPT usage seems to correlate with when school is in session, this along with a Pew Research study from last year  that highlighted that only 58% of U.S. Adults had heard of ChatGPT while over 67% of teens were familiar with the technology makes me think that younger demos are the ones using this tech on an ongoing basis. It would be fascinating to see if this generational usage and awareness is mirrored within corporate environments i.e.: are younger employees using AI-powered tools more than their older counterparts?
• Product Market fit is misaligned: Most people can agree that the long-term potential of AI-Powered tool will be transformative but the current reality is that the technology and its application in the real world is still in its infancy. Many of the companies putting out AI tools do not seem to have great, real-world use cases for the technology. I think it may be up to those of us using this tech on the ground to prove its value outside of the initial use-cases presented by the industry.
• The economics of AI may be unstainable for the start-up ecosystem: Investment in AI Start-ups may be part of the reason it may feel like there is a “bubble” around AI. It is really expensive to build these new LLM models, but most large tech companies view the risk of under-investment as higher than the risk of over-investment i.e.: they would rather spend too much and still be in the race then not spend enough and be behind. This is more of a problem for smaller start-ups where they don’t have enough investment dollars to continue to play in the space and therefore VCs and other investors are not seeing the financial returns they anticipated. This is very similar to the early .com bubble, where there were a ton of early-stage start-ups that took in millions of dollars in investment, but ultimately did not survive. While investment in the space created a financial bubble, the internet did not go away after it burst, it just evolved. It seems like we will likely see the same thing happen in the AI space.

All in all, I do not think the technology is in a bubble, but I do think that we will see a change in how companies and VCs invest in the space. This in itself is a sign of the industry maturing as organizations look for ways to leverage the real value of AI which is not to think of AI as a way to replace human beings, but rather as a way to enhance, enable and empower humans to do things that have never been possible before.

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