Rhon Daguro is the CEO of authID, a leading provider of privacy-first biometric identity authentication solutions.
In the swirl of headlines about whether artificial intelligence (AI) is a market bubble ready to burst, the very question misses the point. To use a term from the ’90s, there is “irrational exuberance” in the AI ecosystem. Valuations are crazy, start-ups appear overnight and capital chases anything tagged AI. But I believe calling the current moment a bubble oversimplifies what’s happening. We’re watching a structural revolution that slightly resembles the internet boom of the 1990s with some key differences.
During the dot-com tech boom, when a lot of us cut our teeth, thousands of companies popped up and then collapsed quickly when the internet frenzy became a correction. A friend of mine remembers being on a company outing in Maui in April 2001 when all his colleagues called the East Coast to scream, “Sell!” on a morning when it looked like all the dot-coms were imploding.
But the crash didn’t erase the underlying transformation that helped finance the infrastructure that now underpins every modern business. The dust left behind wasn’t a ruin, but the foundation of the digital economy that we all enjoy today.
The Reality Isn’t Mania—It’s Foundation
AI differs from classic speculative bubbles in that even early and imperfect deployments are creating tangible business value. Enterprises are embedding AI into workflows, enhancing productivity and even signing multi-year commitments for AI services. The joke in the 1990s was that a business plan scribbled on the back of a napkin could get you funding. But these days, capital isn’t just chasing a story. It’s underwriting demand for data processing, analytics and real-world applications that actual customers are adopting.
Contrast this with many dot-com era companies without revenue, users or viable business models. That crash required a massive do-over. Today, the largest cloud platforms and vendors driving AI adoption have solid fundamentals and existing revenue streams. It’s true that not every AI start-up will succeed or keep their elevated valuations. But the tech itself is not disappearing, and the AI push likely won’t require the same do-over.
Acknowledge The Challenges, Don’t Misread The Moment
There are real hurdles ahead. Many AI companies aren’t yet demonstrating profitability. Some investment patterns look like recirculated air, where suppliers trade POs to support each other’s valuations rather than getting their tech into the public’s check-writing hands: I sell to you, you sell to him, he sells back to me. Market corrections are likely, with analysts disagreeing on how significant those corrections will be.
This will be three steps forward, two steps back. The commercial aspects, where AI tech outpaces profitability, miss the bigger picture. The internet itself didn’t crash because Webvan and Pets.com failed. Entire ecosystems emerged from that period, including processing infrastructure, developer tools and indispensable business models. AI is building something similar, even if some firms fail or get absorbed.
How Business Leaders Should Think About This Strategically
If you’re an executive trying to decide whether this is a bubble or a breakthrough, the more useful question is how to position your organization for what’s coming. Consider three strategic approaches:
1. Separate hype from value. Focus on use cases where AI enhances real business processes and boosts productivity. Not every AI-tagged application will deliver, so prioritize those tied to explicit ROI.
2. Prepare for shakeouts. Like the early internet, we’ll have winners and losers. This means consolidation and repricing, but not a loss of AI’s relevance.
3. Be smart, not impulsive, when implementing AI. Companies that deploy AI as a tool to complement their core business rather than replace whole initiatives will grow those businesses and continue to deliver the value they were built on, without looking like just another AI bandwagon jumper.
Some observers will scream “the bubble is bursting” at the first sign of any downturn. But expect a reassessment, followed by maturity, with the smartest AI implementations creating the strongest enterprise users.
AI will continue to shape how we build, test and deploy, how we communicate, and how we generate and leverage actionable data. AI represents digital transformation on steroids with its own notable challenges. Just as AI makes itself smarter, we have to make ourselves smarter in how we use and invest in it.
Don’t Forget About Security, Compliance And Governance
As AI evolves from toolsets into autonomous agents capable of autonomous activity, we have to be its boss. That means directing its power to ensure it follows our marching orders. Here’s what I’ve found this looks like:
• Bind each AI agent to a human. Require strong identity verification for human sponsors before they can initiate agentic tasks.
• Govern access and permissions. Limit which systems AI agents can talk to and to what degree, including email, HR and finance.
• Implement real-time monitoring. Continuously track agentic AI behavior for anomalies, unexpected actions and policy violations.
• Ensure transparency and auditability. Maintain clear logs and explainable decision pathways to verify actions and outcomes.
• Adopt privacy-conscious design. Minimize exposure of sensitive data and enforce encryption both at rest and in transit. This helps keep you out of trouble with users and the law.
• Plan for human oversight. Enforce escalation protocols and human-in-the-loop review for high-risk or novel scenarios.
Securing agentic AI is not just a technical exercise. It is a strategic necessity. Organizations that embed robust controls today can mitigate risk while earning trust from customers, regulators and partners. This positions them for long-term success in an AI-driven economy, in which properly managed AI agents find the nuggets in our data, simplify our processes and accelerate our productivity. In this way, AI can help empower us to deliver our own best efforts.
Remember that AI is a tool, and it should only scare you if you don’t ensure you’re in control of that tool. If we’re willing to sit through some market bumps that are bound to happen, I believe we’ll come out of this stronger together.
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