Decoupling Technologies from Market Bubbles

The Collins Dictionary announced this week that it had crowned “vibe coding” its Collins Word of the Year for 2025. I have news for the Collins nominating committee: the term “vibe coding” is actually two words.

Semantics aside, I suppose the point of choosing “words of the year” is to show how language continually evolves, negotiating the interchange of technological progress, demographic and social shifts, the reframing of the political Overton window, and economic thrills and spills. We can argue about whether this mélange represents progression or regression, but that won’t stop it from happening. Adaptation is always on the menu. Fortunately or not, people can adapt to almost anything, as the events of the last decade illustrate emphatically.

A word that made the Collins shortlist for this year’s honor proves the point. The word is “broligarchy,” a distressingly apt neologism that denotes “a small clique of very wealthy men who exert political influence.”

To our credit and discredit, as mentioned above, we humans appear endlessly adaptable. What was once considered preposterous or unacceptable can become the status quo. Similarly, the status quo can go from seeming impregnable to surprisingly vulnerable in a matter of years, sometimes months. We are in a period of intense and accelerating change on nearly every front. Accordingly, we should not be surprised when polarities shift suddenly.

When change picks up its pace, volatility predominates. Perspectives can seem skewed toward exaggeration, hyperbole, and radicalism of every hue. Emotional incontinence supplants sober analysis. Sometimes we are subject to the wrong sorts of “feels.” That’s why I am encouraged when I come across level-headed analysis that pays a debt to equanimity and integrity.

Witness the Sausage Making

As an aside, I owe you, my readers, honesty and integrity. Sometimes my tone is serious, sometimes it’s humorous, but what I offer you here are my honest assessments. I’m not always right — nobody is — but I’m always candid and as genuine as I am capable of being. In going through the exercise of thinking things out in public, where you can see my assumptions and how I prepare my verbal sausage, I leave it to you to decide whether what I produce has nutritional value.

I am not a banker — not even close — but I respect the integrity of the views expressed earlier this week by Bank of England Governor Andrew Bailey. Grappling with the doggedly vexing question of whether we’re caught inside an artificial-intelligence-induced market bubble, Bailey arrived at commendably rational conclusions.

To summarize, Bailey said that uncertainty regarding returns on AI investment can coexist alongside an appreciation of AI’s considerable long-term potential. That seems a simple proposition, but many people struggle to reconcile those points. Here’s a relevant quote of Bailey’s from a Reuters article:

"It is, of course, perfectly possible and perfectly consistent that AI could be the next big mover in terms of productivity," he said. "My own view personally is, I think, more likely than not, it probably is.
"But we've still got quite a way to go to actually sort of see that demonstrated. At the same time, we could have a bubble, because obviously the markets are pricing the future stream of returns from this, and that's uncertain. And so, you know, those two things are not inconsistent."

Life Goes On After the Bubble Bursts

There you go. You can have an AI market bubble — we’re probably inside one now — and that bubble can burst or be deflated gradually over a period of time. Nonetheless, the existence of the market bubble and its eventual dissolution, however violent, does not nullify AI’s eventual utility as a tool to realize increased efficiency and productivity. The bursting of a bubble is a market phenomenon, involving the push and pull of greed and fear, but commercial technologies and their applications have lives that endure well beyond cataclysmic events on the public markets.

Consider the Internet (I capitalize the term here given the context). We had a dotcom market bubble that began bursting in 2000, but the underlying technologies and their applications possessed a resilience and longevity that spawned subsequent market growth continues to this day. Today’s hyperscalers, for example, became industry behemoths in the aftermath of the bursting of the dotcom market bubble.

Mr. Bailey’s Bank of England produced a monetary policy report suggesting that equity valuations seem stretched when viewed in a historical context, especially for technology companies involved with AI. Most dispassionate observers would likely agree that valuations are uncomfortably high. Maybe they have a little more room to run — calling a top in any market is an inexact science, which is to say it’s no science at all — but AI-related stocks are in nosebleed territory. You’d have to think twice (or more) before buying into them when they’re on the verge of serious hemorrhaging.

The bank report goes on to note that equity markets are exposed to a correction if expectations about AI become less optimistic. The problem is not the ultimate effect of AI, but whether free-floating expectations have become untethered from reality on the ground.

Limitations of Snapshots, Fluidity of Change

I’m not sure whether why, but people have become unreasonably Manichean or binary in their view of events. We (if I might take the liberty of invoking the “royal we”) have become uncomfortable with the ambiguities and nuances that are unavoidable aspects of life.

It is entirely possible, even probable, that we can have market bubbles that inevitably burst involving technologies that go on to have long and rich lives. These technologies, in their practical use and quotidian value, are unaffected by the implosions or abrupt corrections of irrationally exuberant public-markets.

AI already has a measure of practical utility. What we have yet to determine is whether our assessment of its value is accurately aligned with the technology’s capacity to deliver quantitatively measurable results. Qualitative value is established in certain contexts, though ROI metrics are a work in progress.

Here’s the thing: We can’t make a definitive determination now, or at any single snapshot in the unfolding of time and history. You can have assumptions, buttressed by a methodological approach designed to provide an understanding of market dynamics, but you don’t actually knowwhat will happen. Factors and variables wax and wane, priorities change, extraneous events intrude. The key, I believe, is to monitor and observe constantly, and only adhere to a proposition if available evidence supports it.

We began this piece discussing words, so let’s end with a brief commentary on two words. When we call somebody dogmatic and doctrinaire, we are using pejoratives to describe unappealing, blinkered personal traits.

Don’t be dogmatic and doctrinaire about what you’re seeing in the markets today. Be open to seeing that two things, ostensibly contradictory, can be true at the same time. AI can be the focus of a market bubble that will eventually burst or deflate — the former being a more dramatic adjustment — while also establishing itself as a ubiquitous technological presence. That’s likely how things will go.