Is the AI Bubble About to Burst? (And Why Artists Shouldn't Care)
I’ve been reading a lot about the "AI Bubble" bursting... and honestly? I think it might. But here is why I'm still using the tools every single day.
The hype and the reality are currently not in alignment. The hype says that AI is a "Magic Wand" that can do anything and everything. But the reality, which everyone actually working with AI knows, is that AI has many limitations.
Generative AI, for example, isn't a one-click miracle. It still requires VFX, 3D, and complex image compositing to achieve the results being touted in marketing videos. It’s not just AI; it’s often AI plus VFX, or AI plus 3D, or AI plus image compositing
Once it becomes clear to the general public that AI is not a magic wand, the hype will wear off. In my opinion, we are currently standing at the very top of the "Peak of Inflated Expectations" in the Gartner Hype Cycle. We are at the very early stages of heading downward towards the "Trough of Disillusionment."
And frankly? That’s a good thing.
Gartner Hype Cycle
3 Reasons We ARE in a Financial Bubble
1. The "Dot-Com" Parallel: We are mimicking the late 90s dot-com bubble almost exactly. Right now, you can pitch anything with "AI" in the title, and there is an investor willing to throw money at it. But just like in 2000, the bill is coming due. Now that we’re entering the reality check phase, we will see consolidation. The internet didn't go away after the crash, but the endless stream of VC funding did. As the hype wears off, investors will become discerning. The "anything goes" projects will starve, and only the tools and companies with real staying power, the ones I track in The Lab, will survive.
2. The Nvidia Problem: We currently have one US company, Nvidia, effectively propping up the entire economy. As of 2026, Nvidia has a market cap of over $4 trillion, making it the most valuable company in the world. It represents a massive percentage of the S&P 500’s total gains. It is nerve-wracking to have the entire market’s confidence resting on one chipmaker. All it takes is one bad earnings report or one supply chain hiccup to shake investor confidence, and the market could tumble hard, creating a cascade of panic across the industry.
3. The "Wrapper" Wipeout: For the last two years, too many startups were just "wrappers", thin veneers over ChatGPT with no real proprietary tech. As we slide into the Trough of Disillusionment, these companies are going to be wiped out. They don't have the "moat" to survive when the funding dries up.
3 Reasons We Are NOT in a "Utility" Bubble
1. The Adoption Speed is Unprecedented: Forget the stock market; look at the users. According to the Mckinsey Global Survey on AI in 2025, 88% of organizations are now regularly using AI. We used to talk about ChatGPT hitting 100 million users in record time. That is old news. As of late 2025, ChatGPT reportedly surged to over 800 million weekly active users. This isn’t a "pet rock" fad. People aren't just buying it; they are using it. When nearly a billion people integrate a tool into their daily workflow, that is not a bubble. I see us going into a temporary trough, but the recovery will be fast because the utility is real.
2. Fear is Dissipating: It’s natural for humans to fear the unknown, especially when headlines scream that it threatens our survival. But as we head into the Trough of Disillusionment, people will learn that AI has limitations. Those of us working with Generative AI every day are far less fearful because we see the flaws. We know there still needs to be a human at the wheel. Once the public realizes AI is a tool, not a replacement, the panic will subside, and we will head towards the "Plateau of Productivity."
3. It is Government Infrastructure: If you think AI is just a consumer fad, look at what the White House just launched. In November 2025, the President signed the Executive Order for The Genesis Mission, explicitly comparing it to the Manhattan Project. This isn't just funding; it is a directive to the Department of Energy to build the "American Science and Security Platform", a closed-loop AI system integrating all of our National Labs' supercomputers. The official goal isn't just "better tech", it is to double the productivity of American science and engineering within a decade. When the government mobilizes the entire National Lab system to build an AI infrastructure, the "bubble" discussion becomes irrelevant. The infrastructure is being poured.
Final Thoughts: The New Era
My overall take is that we are due for a new era in AI. It’s not a "bubble" burst that breaks the industry, but a necessary slide into the Trough of Disillusionment.
This phase will be painful for investors, but it will be short-lived for creators. Things will consolidate, the noise will die down, and we will move from the Generative cycle of AI into the Agentic cycle. AI creators will no longer be working with a slot machine, where we enter a prompt and hope it delivers what we asked for, fingers crossed. We will be gaining a reasoning creative partner. AI isn’t here to replace artists, it’s here to expand the canvas, Agentic AI handles the process so we can focus on the vision. And honestly? That is worth a lot more to me than a stock price.
To stay ahead of the curve and see which tools are actually surviving the crash, head over to The Lab. That is where I keep my full AI stack listed in real-time, showing you exactly what I’m working with on a daily basis.