The right question isn’t "AI bubble or not" it’s where the excess sits

The dual truth of bubbles is that when history rhymes, opportunity compounds for those who stay grounded.

Author

Michael Morgenstern
October 28, 2025

Happy Tuesday Brex Community,

The right question isn’t “bubble or not,” it’s where the excess sits inside a very real platform shift. Demand is not theoretical this time. GPUs ship and are used, hyperscalers print earnings, and enterprise adoption is moving from pilots to production. Yet gravity hasn’t been repealed. Venture dollars still dwarf the cadence of truly massive outcomes, and pockets of the application layer are priced like SaaS while behaving like services. Think of this cycle as early innings for infrastructure and cost-saving workflows, later innings for me-too apps and AI-washed narratives. Both truths can hold. Fundamental value creation and local speculation. History rhymes and prudence outperforms bravado.

Guidance for operators and investors is simple, practical, and testable. Stay long infrastructure, power, and tools that bend unit economics today. Underwrite to gross margin, retention, and time to payback, not vibes. Treat many “AI apps” like services when you value them; expect higher churn and lower stickiness unless they own a daily workflow. Prioritize security, governance, and integration into core systems where switching costs rise over time. Keep exposure, keep standards, keep dry powder. When the correction hits, it will punish excess, not the thesis. Would love to hear your thoughts!

Growing together, Michael Morgenstern

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