A growing number of genAI providers and investors now claim that AI is a bubble. That's a bad sign.

(Source: Financial Times, "'Of course it’s a bubble’: AI start-up valuations soar in investor frenzy")

Some go as far as to say that AI is a "good" bubble – because bubbles concentrate investment and effort in a sector to move it forward.

"Of course there's a bubble," said Hemant Taneja, chief executive of venture capital firm General Catalyst, which raised an $8bn fund last year and has backed Anthropic and Mistral. "Bubbles are good. Bubbles align capital and talent in a new trend, and that creates some carnage but it also creates enduring, new businesses that change the world."

To be clear: yes, sometimes bubbles leave important and useful artifacts behind.

On the other hand, bubbles can cause a lot of damage – on the way up as well as on the way down. There's a reason the term is a pejorative!

To wave off the damage as a non-issue strikes me as particularly tasteless. Which is a rather fitting description of the genAI hype wave as a whole.

Anyway, next week's newsletter has been in the works for a while and the recent "bubbles are good" stories will certainly add flavor.

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