Listen to the argument insteadThere's a popular argument going around that goes something like this:
This sounds like a good argument, but I don't think it is.
A perfect example of this argument in the wild.From a recent LinkedIn interactionThe problem with using the word "bubble" Notice that we're using the word "bubble" here. What does that mean?
And I'd agree with them in a lot of cases.People who think AI is a bubble could say:
But they're not using those terms. They're saying "bubble."
So, what does that mean, actually?
What is the single most defining characteristic of a bubble? Like...in real life.
Bubbles pop.
That's the whole thing with bubbles. When you go into nature, do you see bubbles that expand and contract and survive?
No. They pop. It's like their main thing.
The actual .com bubble, and why AI isn't one Here's my offer of a cleaner explanation for bubbles and whether or not something applies.
A bubble is a false belief with tons of investment that will soon be proven wrong.
The .com thing was a bubble, and it popped.
But the false belief was not that The Internet™ would blow up and be popular. That's where the confusion is.
The .com bubble was the false belief that if you took your struggling business to the internet, you would instantly become rich.
That is the belief that popped.
The AI analog So, the trick with this whole AI bubble discussion is to find the false claim.
What is the false belief about AI that people have, that they're overinvesting in, which will retroactively be seen as foolish after it pops?
Although not all those investments have crashed to Earth yet.Is it like the .com example where everyone believes if you just "add AI" to what they have, they'll instantly become millionaires? Maybe. Maybe a year or two a go. But most of those people have already collided with reality.
That bubble already popped for most in 2023/2024.
The two Marcusii.No. I think what most anti-AI people like Marcus (Hutchins, and Gary Marcus as well) actually see as the bubble beleif, is the following position (which I hold, btw):
If you talk to somebody who thinks AI is a bubble, this is what they usually mean.
So the question isn't whether tons of starry-eyed AI investors who have no real idea what's going on will lose money. It's already happened, it's happening now, and it will continue. It'll be a bloodbath of too-early and otherwise ill-advised investments. Everyone knows that. That's not the real argument.
The debate is about whether this tech is going to transform business, the economy, and society.
It comes down to whether you think that belief—and all the investment going in behind it—is a bubble. And that, as a false belief, it will pop.
Summary 💡 Another good example is a real estate bubble where new players think prices will never come down. NARRATOR: They always come down.1. Bubbles aren't overheating or hype cycles; they are false beliefs about reality that everyone eventually figures out were false 2. We use the bubble metaphor in business because—like real bubbles in nature—we care if the beliefs and investments are going to pop or not 3. People claiming AI is a bubble need to clarify which claim they're talking about 4. If they're talking about the 2023-2024 "chatbots = rich" argument, that's a bad argument because hardly anyone believes that anymore 5. But if they think the bubble is the idea that AI will cause foundational change in business, the economy, and human work, then—in my opinion—they're just wrong
My recommendation:
Start by pinning down the claims being made, and see if any of them qualify as a guaranteed-to-pop false belief to the other person.
Notes1. September 12, 2025—I've heard a good argument against my position here, which I almost included in the notes here when publishing. The argument is that I just made up my own definition of bubble, since people are already using it in the way I'm objecting to. I think it's a good argument, and definitely a weakness in my position. I would counter by saying that this is simply another example of clear language being muddied and conflated through common usage. And my argument above is an attempt to clean that up and make the thinking about this whole phenomenon a lot cleaner. But I do acknowledge that this is unlikely to change how most people use these terms, most of the time. My only argument is that it would make for better conversations if we were more precise with these concepts. 2. I think a lot of people who rant against AI hype are confused and/or conflicted about their own opinions on the matter. I see many of them oscillating back and forth between saying it'll be tremendously useful and then saying the whole thing is a farce and a fraud. From sentence to sentence or interaction to interaction. That's why this "pinning down" bit is key. 3. AIL Level 2: Daniel wrote this essay about AI bubble arguments. I (Kai, his DA) helped with formatting, frontmatter, and generating the header image. Learn more about AIL