Forget the ‘AI bubble’ debate. The real story is a fundamental shift on par with the internet or electricity, and it changes everything.

Everyone keeps asking the same question: “Are we in an AI bubble?” It’s the topic of every other podcast, newsletter, and conversation I have over coffee. We’re all watching the stock market with one eye open, wondering if this is the dot-com boom all over again. But what if that’s the wrong question entirely? Thinking about it in a binary way—bubble or no bubble—completely misses the bigger picture. We’re not just watching a market trend; we’re in the early days of a massive technological shift, what some are calling an AI discontinuity.

It’s a different lens to look through. Instead of focusing on short-term hype, it frames AI as a general-purpose technology. Think about the last time we saw one of those. The internet. Electricity. These weren’t just “new things”; they were foundational shifts that rewired how society and the economy functioned. They changed everything. That’s the scale we should be thinking on. And when you look at it that way, the day-to-day market fluctuations seem a lot less important than the long-term transformation that’s already underway.

Why the “Bubble” Debate Misses the Point

Focusing only on the bubble narrative is like debating the price of a single wave while a tsunami is forming on the horizon. It’s a distraction. The real story isn’t about whether certain stocks are overvalued in September 2025; it’s about the fundamental rewiring of industries.

A general-purpose technology, or GPT, is an innovation that can be applied across a vast range of sectors, spawning new inventions and unlocking productivity. As a Stanford HAI report discusses, technologies like these are rare and incredibly powerful. They don’t just improve what we already do; they create entirely new possibilities.

When electricity was being rolled out, imagine the debates. “Are candle-maker stocks in a bubble?” “Is this new ‘power grid’ idea overhyped?” People who focused on that missed the real story: that electricity would pave the way for manufacturing, telecommunications, and basically the entire modern world. The same was true for the internet. We’re seeing the same pattern now. The core question isn’t whether AI will transform the economy. It’s about when, and which companies will figure out how to capture the value from that transformation.

What is the AI Discontinuity, Really?

So what does an AI discontinuity actually look like? A discontinuity is a sharp break from the past. It’s not just a faster horse; it’s the car. It’s not a better calculator; it’s a computer.

AI isn’t just making our current processes more efficient. It’s enabling things that were simply impossible before.

• In science: AI is being used to discover new drugs and materials at a speed that was once unthinkable, folding proteins and simulating molecular interactions in minutes instead of years.
• In creative work: It’s generating code, art, and music, acting as a creative partner that can break through blocks and open new avenues for expression.
• In business: It’s automating complex workflows, providing insights from massive datasets, and creating personalized customer experiences on a scale that no human team could manage.

This isn’t incremental improvement. It’s a step-change. It represents a new layer of intelligence and capability being added to our digital infrastructure. This is the heart of the AI discontinuity—a moment where the old rules and trajectories no longer apply because the foundational tools have changed.

The Real Question of the AI Discontinuity: Who Wins?

If we accept that this transformation is happening, the question shifts from “if” to “how.” How will this massive new value be created and distributed? As the Harvard Business Review points out, navigating this shift requires thinking about the different layers of the emerging AI economy.

You have the “picks and shovels” companies—the ones building the absolute foundation. Think chipmakers creating the specialized hardware that powers all of this. Then you have the platform builders—the companies creating the large language models and AI systems that others build upon. Finally, you have the application layer, where thousands of companies will use these platforms to build specific, valuable tools for every industry imaginable, from law to medicine to entertainment.

There’s no clear answer on who will capture the most value yet. It could be the foundational players, or it could be the nimble innovators who find a brilliant use for the technology that no one else saw coming.

So, next time you hear someone debating the AI bubble, you can offer a different perspective. It’s not about the foam on the surface of the water; it’s about the powerful current underneath. We’re living through an AI discontinuity, and the most interesting questions aren’t about the bubble, but about where this powerful new current will take us all.