"Jenny Xiao, partner at Leonsis Capital and former researcher at OpenAI, came in with a nuanced take. There's something of a bubble, but it's "relatively contained" in the infrastructure layer with overinvestment primarily in data centers, GPUs and in large language model companies. But right now, there's actually underinvestment in the application layer because there are so many ways AI can make an impact in various enterprises, Xiao said."
"Vanessa Larco, former partner at New Enterprise Associates (NEA) and co-founder of new venture firm Premise, has a contrarian view. "Everyone thinks enterprise is safer," Larco said. "But I actually think the consumer might, this time around in the current environment, be what survives." Larco's reasoning is that if a consumer adopts your AI product, it's because you're giving them something faster, "radically cheaper, or much easier to use." Once you've done that and built a brand, it's very hard for people to quit you."
There is a relatively contained bubble concentrated in AI infrastructure, driven by overinvestment in data centers, GPUs, and large language model companies. Investment in AI applications appears comparatively low, leaving numerous opportunities for enterprise impact. Consumer AI may prove more resilient because adoption that delivers faster, radically cheaper, or much easier experiences creates strong brand stickiness. Venture funds across sizes plan to deploy tens to hundreds of millions into AI-backed companies over the coming decade, producing a few spectacular successes and many failures. Historical boom dynamics suggest that the vast majority of companies fail while one or two become dominant platforms.
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