Understanding AI’s Economic Impact: A Patience Approach

This is a position / discussion paper I finalized in January 2026, after thinking about it and using it in workshops throughout 2025. I am influenced by some really smart people (RSPs), and some really optimistic people (ROPs) about the AI Opportunity. While I do not see a ‘bubble’ in the strictest and likely most-accepted definition, I did (and still do) see that justified adoption is the biggest unknown with regard to revenue and eventual profitability that justifies the current build-out.

Enough about this .. here’s the paper as it evolved through 2025 (after reviewing for relevance, given the year turning to 2026 while I wasn’t looking). Discuss!

Executive Summary

Artificial intelligence is real, useful, and increasingly embedded across the economy. However, its current market narrative is narrow and fragile, driven by a small number of dominant technology firms. As AI adoption decentralizes, where it is shifting from purchased products to internally built capabilities, the broader economy may benefit even as technology vendors face margin pressure and compression of earnings multiples. This dynamic favors patience over prediction: not a sudden collapse, but a slow erosion of valuation driven by persistent uncertainty and diminishing AI-based revenue capture.

Disclaimer: This paper reflects personal observations and market perspectives for discussion purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. All views expressed are subject to change without notice, and readers should conduct their own analysis or consult a qualified financial professional before making investment decisions.

Overview

The current market debate around artificial intelligence often frames the question incorrectly: Is AI a bubble, or isn’t it? That binary framing misses what is actually happening beneath the surface. AI is real. It is useful. It is being adopted. But the way it is being adopted matters more than the headlines suggest. This is not a call for a crash, nor a rejection of AI. It is an argument for patience, and for recognizing that uncertainty itself can erode value over time.

Discussion Points

• Today’s AI narrative is being driven by a small handful of very large companies. That does not make the narrative wrong, but it does make it fragile. When index performance depends disproportionately on a few leaders, markets become less resilient to shifts in belief, even as benchmarks appear strong.
• Much of today’s apparent AI growth is circular. Capital expenditures at one megacap become revenue at another, creating the appearance of broader demand. This dynamic can persist for long periods, but eventually raises questions about true return on investment for companies that are not directly a part of this growth loop.
• Historically, bubbles do not burst during the buildout phase. They unwind when buyers stop believing the ROI story, and not necessarily when the technology isn’t working as well for them as they expected. The more plausible risk today is not a sudden collapse, but a gradual erosion of enthusiasm for adoption and deployment, resulting in contract negotiation impacts.
• A key shift underway is that many companies are adopting AI internally rather than purchasing expensive, finished solutions. This decentralization increases productivity and efficiency more broadly across the economy, but does not guarantee sustained revenue growth for large-cap AI vendors.
• As technology becomes a baseline company capability rather than a premium product, pricing power erodes. This disproportionately affects software and platform companies whose valuations depend on centralized monetization, while non-technology firms may quietly benefit from productivity, cost savings, and enhanced capabilities.

The present environment is defined less by fear than by unresolved uncertainty .. policy uncertainty, trade uncertainty, and unclear timelines for AI return realization. Markets can reprice known risks quickly, but prolonged ambiguity caps upside and encourages rotation rather than commitment. The likely outcome is neither a dramatic collapse nor a triumphant continuation of the current narrative. It is a slow burn, where enthusiasm fades, uncertainty persists, and valuation does the work. In that environment, patience and effort are not passive .. they are strategic.