So here's a sentence I didn't think I'd be writing in 2025: Wall Street is starting to wonder if we've all been a little too enthusiastic about AI.
The Nasdaq Composite Index dropped 3% this week—its worst week since Trump announced his tariff plan back in April. And while there are obviously other economic factors at play (government shutdown, consumer sentiment, widespread layoffs), the fact that tech-heavy indexes took a harder hit than others is telling.
The Hype Cycle Comes Full Circle
Cresset Capital's Jack Ablin put it pretty bluntly: "Valuations are stretched. Just the slightest bit of bad news gets exaggerated, and good news is just not enough to move the needle because expectations are already pretty high."
I've been in tech long enough to have lived through a few hype cycles, and this feels familiar. Not quite dot-com bubble levels of absurdity, but definitely in that neighborhood where everyone's afraid to be the first person to admit the emperor might be slightly under-dressed.
The Reality Check Nobody Wanted
Here's the thing—AI is transformative. I use AI tools every day. They've genuinely changed how I work. But have they changed things enough to justify the absolutely bonkers valuations we've been seeing? That's the trillion-dollar question, literally.
Companies have been pouring billions into AI infrastructure, hiring sprees, and R&D. Nvidia recently announced orders for $500 billion of its advanced data center chips over the next five quarters. That's not a typo. Half a trillion dollars.
But where's the proportional revenue? Where are the killer apps that justify this level of investment? ChatGPT is great, but is it "restructure the entire global economy" great? I'm not convinced yet.
What This Means for the Rest of Us
If you're working in tech, particularly in AI, you're probably feeling this shift. The easy money era might be winding down. Companies are going to start asking harder questions about ROI. "We're using AI" is no longer a sufficient answer to "why should we invest in this?"
A friend of mine who works at a late-stage startup told me their CEO just sent out a memo basically saying "every AI initiative needs to show clear business value or it's getting cut." Six months ago, that same company was throwing money at anything with "AI" in the name.
The Nuanced Take
I don't think this is the end of AI hype entirely, and I definitely don't think AI is useless. What I think we're seeing is a necessary correction. The technology is real and powerful, but it was getting valued like it had already solved every problem it might solve in the future.
Meta's stock is trading at 21 times forward earnings, which is actually extremely cheap for a company with Meta's growth and business quality. So there are real opportunities here for people who can separate signal from noise.
The companies that survive this correction will be the ones with actual products that generate actual revenue. Novel concept, I know.
What I'm Watching
The next few months are going to be interesting. We'll see which AI companies have real business models and which were just riding the hype train. We'll see whether enterprises actually adopt AI at scale or if this was mostly just pilot projects and PowerPoint presentations.
My bet? We're headed for a period of consolidation and reality-checking, but the fundamental tech isn't going anywhere. It's just going to have to prove it's worth the investment—and honestly, that's probably healthy for everyone involved.
Just maybe don't go all-in on AI stocks right now. Or do, I'm not your financial advisor.