Post-bubble AI; mobile authoring; Epstein cries Wolff: Newsletter 19 November 2025
Newsletter 124. When the AI bubble inevitably bursts, what happens next? Plus, a book written on a mobile phone while hiking, Epstein fallout in the book business, three people to follow and three books to read. And if you’re interested, join my webinar today (Wednesday) at 1pm ET on AI and the Writing Profession.
After the bubble
AI is a bubble. When it implodes there will be fallout. But there’s no going back.
Lots of us have suspected that AI is a case of companies overinvesting in a worthwhile technology to attempt to get ahead (or not fall behind) their competitors. When that happens, eventually people give up and the bubble pops.
It’s not just me who worries about that. The BBC interviewed Google CEO Sundar Pichai. From their article about that interview:
Mr Pichai said the industry can “overshoot” in investment cycles like this.
“We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound,” he said.
“I expect AI to be the same. So I think it’s both rational and there are elements of irrationality through a moment like this.”
Every company would be affected if the AI bubble were to burst, the head of Google’s parent firm Alphabet has told the BBC.
Speaking exclusively to BBC News, Sundar Pichai said while the growth of artificial intelligence (AI) investment had been an “extraordinary moment”, there was some “irrationality” in the current AI boom.
Asked whether Google would be immune to the impact of the AI bubble bursting, Mr Pichai said the tech giant could weather that potential storm, but also issued a warning.
“I think no company is going to be immune, including us,” he said.
Bubbles pop. What happens next?
The most relevant comparison is what happened with the “dot-com bubble” in 2000. At the time, excitement regarding internet and ecommerce companies was at fever pitch. Perhaps the most emblematic example was a commercial in the 2000 Super Bowl by pets.com, an unprofitable internet retailer founded just two years earlier.
The tech-centric NASDAQ index, fueled by dot-com mania, peaked at in March 2000 at 5,048. In April, a report by my colleagues at Forrester Research, “Demise of dotcom retailers,” called out the illusion and reinforced that perhaps it was time to admit that expectations, investment, and valuations were vastly inflated. By December, the NASDAQ stood at 2,340, having lost more than half of its value.
The impact of the bubble bursting were not limited to dot-coms. VC funding receded by 80%. A macroeconomic recession took hold in 2001. Half a million tech workers lost their jobs.
But what happened next?
The internet did not go away; instead, it became a pervasive force in changing how we did everything. Ecommerce took a hit but surged back.
The best way to understand this is through the Gartner Hype Cycle, a chart that describes the inevitable runup, overinvestment, crash, and then normalization of all new technologies.
Any day now, the AI bubble will pop. VC investment in AI will go from irrational exuberance to a cold shoulder. Well-funded AI startups will implode. Tech employment will recede. Corporations will pull back on their AI investments. And the large companies that made the biggest AI investments — OpenAI, Alphabet/Google, Microsoft, Amazon, Apple, Meta, and X — will see their valuations fall severely and have to retrench.
There are going to be a lot of half-finished data centers and a lot of half-done corporate projects. And given how AI is interwoven into so many activities already, the impact will not be limited to AI and tech companies. The broader market will crash. There will be lots of shouting and finger-pointing. Politicians in power will attempt to blame their opponents, previous administrations, and corporate greed, but it’s likely that new politicians with new ideas will displace those currently in power.
It will take a while to recover from all this upheaval and suffering. But AI is not an illusion. Just as with the dotcom crash, underneath the hype, there is enormous value to be had. AI replaces drudge work, increases efficiency, finds valuable hidden patterns, makes people smarter, replaces inefficient internet search, and changes how work happens. None of that is going to change.
During the coming AI winter, the smart money will shift from “Invest in everything AI” to “find places where AI can clearly be useful.” And based on all the experimentation so far, there are a lot those places.
The people who believe AI is about to fix everything are wrong. The people who believe AI will disappear after the bubble pops are wrong, too.
A new world of rational, valuable AI is going to rise to take the place of the hype-inflated one we’re now living in. I don’t know how long it will take, or how it will look. But after thirty years of watching tech rise and fall, I feel quite certain that it’s coming.
News for writers and others who think
Olivia Nuzzi wrote most of her book American Canto on her phone while hiking (New York Times, gift link).
Panelists at the Frankfurt Book Fair discussed whether AI could reduce book translation costs by 90%.
Bestselling author Michael Wolff has made a living off unprecedented access to figures in power. But being the ultimate insider has a downside: he’s prominently featured in the recent release of infamous pedophile Jeffrey Epstein’s emails.
More Epstein fallout: Sarah Ferguson, former Duchess of York, wrote a children’s book, but it’s been withdrawn from publication, likely due to her ex-royal ex-husband Andrew’s connection to Epstein.
Three people to follow
Erica Dhawan, author and expert on teamwork and innovation
William Reeve MARLA, British serial entrepreneur
Susan Baracco, ghostwriter for women who lead
Three books to read
Unabridged: The Thrill of (and Threat To) the Modern Dictionary by Stefan Fatsis (Atlantic Monthly Press, 2025). A popular word nerd explains how language — and dictionaries — continue to evolve.
Four Levers Negotiating: The Simple, Counterintuitive Way to Higher Deal Values and Lasting Trust by Todd Caponi (Matt Holt, 2026). A standout sales thinker explains what how to build trust as you negotiate.
Next Play: How to Focus on What Matters Most and Improve Performance, Productivity, and Fulfillment by Alan Stein Jr (Amplify, 2025). Simplifying the path to success by focusing on the present.
Programming note
Join me at 1pm today (Wednesday Nov 19) for a presentation of our recent survey on AI and the Writing Profession. Sign up here.