Belated New Year Salutations from the Belly of the Bubble

Is it too late to wish everyone a Happy New Year? I suppose it’s never too late, though early returns suggest that the year ahead might be strewn with potholes, landmines, and geopolitical brutalism.

Still, we forge ahead. Well, what choice do we have? We can’t go back, only forward. So, we go forward, into the murk, looking for some sunshine along the way. For many of us, a quiet life would suffice. No chance of that, unfortunately.

The start of a new year is arbitrary. We could call an end or a beginning on any day we like, but for the sake of collective sanity and collaborative planning, midnight on December 31 signals the end of one year and the start of another.

In a sense, of course, a split second doesn’t make that much difference, unless, of course, you befall or are blessed by a truly life-altering event. For most of us, though, the start of 2026 is not dissimilar to the end of 2025. That’s particularly true in the technology industry, where the stock-trading elephant in the room was preoccupied by suffocating visions of being trapped within an AI bubble. Nearly everybody shared the elephant’s unease because the bursting of a bubble — depending on how large the bubble grows before it meets its sticky demise — is apt to leave carnage across a large blast radius.

When a big bubble bursts, companies can go under, some will put themselves up for sale (“review strategic options”), others will retrench, startups will have to acquiesce to dispiriting down rounds, and vast tranches of jobs will be lost. This is why so much time is spent in pensive contemplation of whether we’re in a bubble and, if we are, when it will burst. The topic is not the sole preserve of stock traders and Wall Street analysts; nor should it be. Nearly everybody has a stake in the outcome, even if they’re not aware of their risk exposure.

Consensus as Zeitgeist

What’s particularly frustrating about the bubble fixation is that nobody can see into the future with preternatural clarity. Somebody, of course, will be directionally correct, either calling for the market to continue to grow, or predicting that the AI bubble and its subsequent implosion will occur; but none of these prognosticators has foreknowledge of the exact contours and dimensions of occurrences that are yet to come. Prediction, as we’ve noted here before, is a hard, humbling business. Even those who occasionally get it right, directionally speaking, mostly get it wrong. Prognosticators, like hardened gamblers, prefer to accentuate (and brag about) their triumphs while consigning their countless missteps to a bottomless memory hole.

That said, you can learn a lot from the formulation and propagation of consensus, however wrong or right it may be. Consensus is a dimension of the zeitgeist. The consensus, among many Wall Street market makers, is that, yes, we are in a bubble, and that, no, the bubble is not sufficiently distended as to burst imminently. Many denizens of Wall Street seem to believe that you have at least another year of AI expansion to enjoy, though some caution that growth is likely to moderate in 2026. Still, they’re forecasting that most of the AI principals — from AI infrastructure behemoths, such as Nvidia, to AI LLMs startups attracting massive investments and eye-popping valuations — will prosper, luxuriating in riches for at least another 365 days.

Can you believe them? Well, I’m not here to tell you what to do, but I can offer some perspective on how to do it. Research, research, research. You don’t have to research to the point of analysis paralysis. You need only do it to the point where you feel you have a sound understanding of where the market is today and how it is likely to evolve directionally in the weeks and months ahead.

To reach a thesis on the market, you review the available data of relevance, including what the optimists and pessimists (bulls and bears in investor parlance) have to say. Then you interrogate their reasons for saying it. Does what they’re saying make logical sense? Is it grounded in substance or skewed by irrational bias?

You might also want to consult the more ambiguous assessments of the skeptics, those who are neither exuberantly bullish nor relentlessly dour. Some people refer to moderate voices and skeptics as “fence sitters,” condemning a reluctance to unambiguously take a side. For my part, I’ve often found that, even when the skeptics are incorrect in their assessments, their lack of a partisan rooting interest gives them a detachment and objectivity that enlightens rather than burns.

When the Buzz Wears Off

As for the specter of the bubble, what will happen, when it finally materializes, will be both similar to and different from what has gone before. Certain patterns recur, even if each successive turn of the wheel involves different actors, scripts, sets, and special effects.

So here is not a prediction, then, but an observation: We’ll know AI has come of age as a technological implement when we no longer consider it to be an exhilarating novelty, full of limitless possibilities, but as something that we use, in one fashion or another, every single day. AI will become commonplace, unexciting, a quotidian part of our lives. That’s the way it went for every other major technology breakthrough, from trains to cars and airplanes, and from telegraph to telephone and the internet and the World Wide Web (including VoIP, something we don’t even mention in passing these days, but, trust me, was considered a big deal at the most recent fin de siècle).

Over and over again, persistent observation and familiarization turns what was once astounding into something that is mundane. The period between the two, when the shiny breakthrough retains its halo of otherworldly exceptionality, is both when the greatest market growth occurs and when bubbles form and ultimately burst.

When the thrill is gone, the work goes on. There’s always more to do. There’s always something new. It’s a blessing and a curse.