Ai is somewhere in this cycle but where? The Gartner Hype Cycle The Hype Cycle, developed by the research firm Gartner, offers the clearest framework for this phenomenon. It maps a technology's journey through five phases: Innovation Trigger:A new technology or breakthrough creates a stir in the media. Early proof-of-concept projects surface, but commercial viability is unproven. Peak of Inflated Expectations:Early publicity generates intense, often unrealistic, enthusiasm and expectations. Many success stories are reported, but so are numerous failures. Trough of Disillusionment:Interest wanes as experiments and implementations fail to deliver on the inflated expectations. This is the "down period" where the technology struggles to prove its value, and some providers may fail or shake out of the market. Slope of Enlightenment:Investments continue as surviving providers refine their products to satisfy early adopters. Real-world benefits become clearer, and second and third-generation products appear. Plateau of Productivity:The technology reaches its mainstream adoption phase. Its broad market applicability and relevance are evident, and it begins to pay off. I would argue we are already entering the disillusionment part of the cycle. THE TIME IS NOW TO SELL Ai investments. I remember back in the computer/internet days of the late 80's early 90's and you can have a two year down period within a larger massive trend- the Internet in that case. We are entering a down period which I feel will be faster than two years but down never-the-less. GPT-5 showed the world the limitations of Ai. It was a step back. The MIT survey is a seminal change in perception. Machine learning has hit a dead end. AGI is just creepy. It has very little real world applications other than robots for the dying and elderly. Data Center melt down? There is a danger. Over the first half of 2025 data center investments have equaled the consumers contribution to GDP. This cannot continue at this rate. Can we have a reset of expectations without a radical turn against Ai? I think so but first we need blood in the streets. This is Fifth Technological revolution. Each one had a bubble and a crash.. but we still use the internet don't we? I think Ai can come out the other side. You don't get much of a warning unless you are reading GBA materials but the point of being ultra aware is when everyone agrees prices are too high for stocks but they keep buying. The top 10 companies in the S&P today are more over valued than the the top stocks in the 1990's. In a larger question, tech racing into an asset heavy environment rather than asset light (the cloud) presents real world problems- like electricity. And the building of these data centers what if the business does not follow? We are entering a period of re-thinking Ai. First movers have spent an initial amount and now they will wait. New adopters may find prices too high and results too menial. The old era of high margins in tech is done. Take Open Ai - They have $1 billion in revenue and still cannot turn a profit. The phrase You Reap What You Sow is very beautiful. I see it as both a universal warning about how to treat others but also as a reminder that if you plant the right seeds, at the right price you can enjoy a future bounty.~si
Wrong. The AI hype has just begun. Why would I take advice from a company whose stock is down 48% in the last year? IT is down 33% from the Tariff low on April 8th. What a dog.
This is why I love Dan.- He is willing to stray from the common thought just after he reads me. Niles Management’s Dan Niles: ‘This market is addicted to easy money’ Aug. 28, 2025 Despite Nvidia (NVDA) reporting earnings that beat top and bottom line estimates, its shares fell slightly as data center revenues missed expectations, intensifying fears about Chinese competition. Dan Niles, founder and portfolio manager at Niles Investment Management, expressed concerns during a CNBC interview aboutthe sustainability of current market valuations, particularly in the AI sector (NYSEARCA:AIEQ), (ARTY). “If you are honest with yourself, you look at this and say, ‘they actually missed data center revenues for the first time since any of us heard about ChatGPT,’” Niles stated, contradicting his earlier bullish stance on the company. He pointed to several concerning signals in the AI space, including Sam Altman’s comments about an AI bubble and ChatGPT-5’s disappointing performance. Niles emphasized that the market’s positive reaction to otherwise concerning news stems primarily from anticipated Federal Reserve rate cuts. “This market is addicted to easy money. And in that environment, you’re paid to just take risks because you’re not really going to get punished,” he said, suggesting that monetary policy is currently overshadowing fundamental business metrics. He highlighted troubling data about AI investment returns, noting that “95% of corporations investing in AI are seeing 0% returns” according to an MIT study. He also pointed to Meta’s (META) hiring freeze following an earlier hiring surge as further evidence of cooling enthusiasm for AI investments among major tech companies (MAGS). Drawing parallels to the dot-com era, Niles compared the current market environment to 1999 when the Nasdaq (COMP:IND) surged before its eventual collapse. “The four biggest hyperscalers – (MSFT), (AMZN), (GOOGL), (META) – have had their capex double to $600B over the last two years,” he said, warning that while the market currently ignores valuation concerns, investors will eventually need to differentiate between AI’s winners and losers. The veteran semiconductor analyst concluded that while current monetary conditions support continued market optimism, more pragmatic considerations about returns on AI investments will eventually matter. “Right now, the market just doesn’t care,” he said, suggesting that this indifference to fundamentals won’t last indefinitely.
It will be interesting action today. The psychology of markets- Yesterday say you are a large holder of NVDA, and you get those earnings good as they were but not great and you are frozen like a ferret. Maybe if I don't move it won't move; if I don't act no one will act, we will all turn away and not notice.. maybe we all just sit here... 2nd day reactions are the tell... Maybe the stk is just too strong, but I have a bet with a friend today NVDA opens down and stays down today.
The Journal is doing some of the best writing. What a frighting look at Ai. A must read. What if we get a spurt of madness out of this... a Japanese like horror movie.