AI Bubble Parallels: Why a Market Correction Is Inevitable

"Are we in an AI bubble?" is a question I get asked often.

The answer's pretty clear.

We're definitely experiencing an AI bubble, and the parallels to the dot-com era are impossible to ignore.

I say this as someone who implements AI workflows for companies daily.

Don’t get me wrong, the technology is transformative and delivers substantial value - but the market fundamentals are unsustainable.

Here's what I'm seeing: Corporate AI spending has reached irrational levels, particularly among large enterprises.

Venture capital is flooding into any startup with "AI" in its pitch deck, creating companies with enormous valuations but minimal revenue to justify them.

When the inevitable correction occurs, we'll see predictable patterns emerge:

Market contraction - Stock prices will adjust to reflect actual business fundamentals rather than speculation.

Capital discipline - Venture funding will become more selective, focusing on companies with proven revenue models rather than theoretical potential.

Consolidation - Cash-strapped startups will either disappear or be acquired at significant discounts. Many niche AI applications - particularly single-purpose marketing tools - will likely vanish entirely.

The fundamental issue is that too many venture-backed AI companies are solutions searching for problems, rather than addressing genuine market needs.

Without sustainable revenue streams, they won't survive.

The correction isn't a question of if, but when (and no, I don’t know when).

Smart businesses should prepare for this reality while continuing to invest strategically in AI capabilities that solve actual problems and provide measurable ROI.