The Hype Correction Is the Best Thing That Could Happen to AI

MIT Technology Review published “The Great AI Hype Correction of 2025.” Markets sold off on AI bubble fears. Michael Burry shorted Nvidia and Palantir. The Dow and S&P dropped as investors questioned whether AI investments would ever produce returns.

The headlines are breathless. “Is AI Over?” “The Bubble Has Burst.” “The End of the AI Gold Rush.”

I’ve been building AI products all year. And from where I sit, the hype correction is the best thing that could happen to this industry.

Two Different Conversations

There are two conversations about AI happening simultaneously, and they have almost nothing to do with each other.

The first is about AI as a financial instrument. Valuations, TAMs, revenue multiples, whether Nvidia’s stock price is justified by actual demand. In this conversation, AI is an asset class, and the question is whether investors will get their money back.

The second is about AI as a tool. Engineers, product managers, and operators using AI to solve actual problems for actual users. In this conversation, AI is a set of capabilities, and the question is whether it works well enough to ship.

The hype correction is happening in the first conversation. The second conversation is going great.

What the Bubble Narrative Misses

The bubble narrative assumes that if AI companies can’t justify their valuations through near-term revenue, the technology itself must be failing. This is like saying the internet was a failure in 2001 because Pets.com went bankrupt.

The underlying technology is better today than it was a year ago. Models are more capable, more efficient, and cheaper to run. The tooling is maturing. MCP is standardizing integrations. Agent frameworks are becoming production-ready. Developers are learning what works and what doesn’t.

The correction isn’t about whether AI works. The correction is about whether the venture math works at current valuations. Those are different questions, and conflating them leads to bad decisions on both sides.

Clearing Out the Tourists

Every technology hype cycle attracts tourists: companies and investors who don’t understand the technology but want to ride the wave. They raise money on slide decks. They hire “AI teams” that don’t ship products. They buy platform licenses and call it transformation.

When the hype corrects, the tourists leave. And that’s healthy. It means the remaining investment, attention, and talent flows toward people and companies that are building useful things.

I’ve been through this cycle multiple times. I was at Amazon when voice AI went through its hype-to-correction arc. I watched the “big data” cycle from inside Wayfair. I built at Drift during the conversational AI bubble and subsequent rationalization. The pattern is always the same: irrational exuberance, correction, then the real work begins.

We’re entering the “real work” phase for AI. That’s exciting, not scary.

What I’m Building Right Now

Since I’m arguing that the correction is good for builders, let me be specific about what I’m shipping.

Vestmark Pulse: an intelligence platform that gives users proactive insights. Not a chatbot. A system that continuously monitors, reasons, and surfaces actionable intelligence.

An internal app platform that lets any of our 400+ employees create fullstack applications through natural language. In production. Used daily. Solving real problems.

A security-first approach to agent infrastructure, because the current generation of agent frameworks treats security as an afterthought and somebody needs to fix that.

None of this requires AI to be at the peak of its hype cycle. In fact, it’s easier to build when the hype is down, because you can focus on solving problems instead of managing expectations.

The Advice

If you’re a builder, ignore the bubble talk. Keep shipping. The technology works. The problems are real. The value is there.

If you’re an investor, look for the companies that kept building through the correction. Those are the ones that believe in what they’re doing because they’ve seen it work.

If you’re a CTO, this is the best time to start or accelerate your AI initiatives. The talent pool is growing as tourists leave. The tooling is maturing. The expectations are more realistic, which means you’re more likely to be impressive with genuine, incremental progress than you would have been during peak hype.

The hype correction is not the end of AI. It’s the end of the beginning. The real work starts now.