AI Mania: Hype, Delusion, and the Premature Endgame

This OpenClaw / Claude Code hype cycle is reminding me of NFT era hysteria.

There’s a new technology. It has utility. It has cultural and narrative resonance for the zeitgeist. And like every technology that captures the collective imagination at the right moment, it’s being processed through the same distortion machine that turned JPEGs of apes into a $40 billion asset class.

The pattern is familiar. A real innovation arrives. Early adopters discover genuine value. Then the social layer takes over - and suddenly the conversation detaches from the technology itself and becomes about positioning.

It is in-group to say this is the future. There is social affirmation for writing guides and think pieces and overstating the present value. The takes compound faster than the technology itself.

(I promise there’s a financial markets take here later on).

The perception machine

X makes this worse. Social media is increasingly treated as a legitimate lens for reality, and it bends the picture.

The loudest voices aren’t representative - they’re performing conviction for an audience that rewards it. Every major platform runs on engagement, and engagement rewards extremity. “This is interesting and useful” doesn’t travel. “This changes everything and your job is gone” does.

A hundred quote tweets saying “this changes everything” is not a signal. It’s an echo. And the echo gets mistaken for consensus, which gets mistaken for truth, which gets mistaken for an investable thesis.

Girard would have had a field day. When enough people perform belief in an outcome, the performance itself becomes confused with evidence for the outcome. The NFT era proved this definitively. People didn’t want JPEGs. They wanted to want what everyone else wanted [1].

What’s real?

The latest model capabilities are incredible - so much more so than NFTs, which had almost none beyond speculation and cultural signaling.

I use these tools daily. They make me more efficient in concrete, measurable ways. The underlying models are genuinely impressive, and the trajectory of improvement is steep. When I compare what I could do with these tools six months ago to what I can do today, the delta is significant.

And the broader potential is enormous. AI-assisted coding, research, analysis, writing - these aren’t hypothetical use cases. They’re happening now, and they’re creating genuine value for people who know how to use them well.

I don’t want to be the guy dismissing the internet in 1998. That’s not the point. I’m very long AI.

The point is about timelines and about the gap between the potential and the present.

What’s not real yet

No - Claude is not going to catalyze immediate societal upheaval. It is not going to mean humans don’t need interfaces to manage work. It does not mean that Anthropic has won the AI wars.

Consider what the most breathless takes actually require you to believe. That enterprise software - decades of accumulated workflows, integrations, compliance frameworks, and institutional knowledge - gets replaced in quarters, not years. That per-seat pricing dies overnight. That companies with $10B+ in revenue and 80% gross margins evaporate because a chatbot can write a function [2].

Dan Ives at Wedbush put it plainly:

“Enterprises won’t completely overhaul tens of billions of dollars of prior software infrastructure investments to migrate over to Anthropic, OpenAI, and others” [3]. And Jensen Huang - who has more reason than anyone to hype AI’s disruptive power - called the notion that AI replaces software “the most illogical thing in the world” [4].

The people most aggressively declaring the endgame (h/t @ WillManidis for the now-popular term) are the ones with the most to gain from you believing it’s here. Followers, consulting gigs, newsletter subscriptions, conference invitations. The incentive structure rewards bold predictions with no accountability for timing.

The market mirror

Here’s what’s interesting to me. The market is ALSO making the same mistake from the other side of the table.

Anthropic released its Claude Cowork plugins on January 30, and within a week, $285 billion evaporated from software, financial services, and asset management stocks [5].

$IGV - the software ETF - is down 22% this year while the S&P is up. 100 of 110 constituents are in the red. The RSI hit 16, the lowest reading since September 2001 [6].

Hedge funds are megashort software and piling on [7]. The narrative: AI kills SaaS. Every seat-based software company is a dead man walking.

The selling has been indiscriminate. Companies with fundamentally different risk profiles from AI disruption, all treated as the same trade [8].

When 100 of 110 names in the index are down, the market isn’t doing analysis. It’s high on narrative.

Note: since I started writing this, a recovery may already be underway.

Babies and bathwater

Look at what’s actually happening inside the companies that supposedly face extinction.

Salesforce grew Agentforce revenue 330% year-over-year to $500M+ in annualized revenue and threw off $12.4B in free cash flow. Forward P/E is 15x. They just issued a $60B revenue target for fiscal 2030 [9]. This isn’t a company being disrupted by AI - it’s a company building the enterprise delivery layer for AI.

ServiceNow grew subscriptions 21%, expanded operating margins to 31%, and authorized a $5B buyback. Their AI suite, Now Assist, hit $600M in annual contract value and they’re targeting $1B+ by year end [10]. The stock is down 50% from its high.

Do these names deserve a modest re-rating to adjust for risk? Perhaps. But the sharps started pricing this in years ago.

And as many smarter folks than I have pointed out: the selloff requires you to simultaneously believe that AI capex is collapsing AND that AI is powerful enough to destroy the entire software industry [11]. Both things cannot be true at the same time. Pick one.

Separating the real risk

Will some companies get genuinely displaced? Yes.

Point solutions doing one standardized workflow are vulnerable. If your entire product is an interface layer over non-proprietary data, you have a problem. LegalZoom is down 20% - and for names like these, the concern has more substance [12]. When an AI plugin can automate contract review and NDA triage, the value proposition of paying a legacy vendor for the same function gets harder to defend.

But the companies with deep integrations, proprietary data, and platform-level entrenchment are a different story entirely. Salesforce is wired into every Fortune 500 company’s tech stack. ServiceNow is the system of record for enterprise IT. Datadog’s consumption-based model means more AI compute translates directly to more monitoring revenue - their non-AI revenue growth actually accelerated to 20% year-over-year [13].

Selling digital infra because “AI kills software” is like selling construction equipment stocks because buildings are going up.

We’ve been here before

The 2022 SaaS crash is instructive. The sector fell 50%+. Median forward revenue multiples dropped from 25x to 7x - below pre-COVID levels [14]. Earnings were fine the entire time. The recovery was significant - the Nasdaq gained 43% in 2023. Granted, the cause was more of a rates shock than fundamental deterioration.

The DeepSeek panic of January 2025 is even more recent. Nvidia cratered on fears that cheaper Chinese AI models made the entire AI infrastructure buildout pointless. It recovered fully [15]. The fear was structurally identical to today’s: a single product announcement triggering an existential reappraisal of an entire sector.

Many observers have drawn direct parallels between the current moment and the early stages of the dot-com bust - tech declining while consumer staples, utilities, and healthcare rally [16]. But here’s the thing about the dot-com bust: Amazon fell 94% and then became one of the most important companies in the world. The market’s attempt to price in the endgame from the middle of the game created one of the greatest buying opportunities in history.

Jim Reid at Deutsche Bank was honest about it:

“Identifying the long-term winners and losers at this early stage is close to pure guesswork” [17].

I’d bet he’s right. And that uncertainty - the admission that we don’t yet know how this plays out - is precisely what makes the indiscriminate selling a mistake.

The endgame fallacy

The hype merchants on X and the panic sellers on Wall Street are making the same error from opposite sides of the board.

One group says AI has already won, that the future is here, that every institution and job function gets rewritten starting now. The other group says AI has already killed software, that recurring revenue is dead, that $10B in free cash flow doesn’t matter because the model is obsolete.

Both are jumping to the endgame while there’s still a lot of moves to play.

The gap between where we are and where this technology is going will get filled with messy, incremental, company-specific progress. Some software names will integrate AI and come out stronger. A few will get genuinely displaced. Most will adapt - slowly, unevenly, in ways that don’t make for good tweets.

The actual trajectory is more volatile and less deterministic than either the hype or the panic suggests. And the people who do well from here will be the ones who can sit with that ambiguity instead of reaching for a narrative that resolves it prematurely.

Great operators will always find a way.

Sources

[1] https://www.iep.utm.edu/girard/
[2] https://fortune.com/2026/02/04/why-saas-stocks-tech-selloff-freefall-like-deepseek-2025-overblown-paradox-irrational/
[3] https://www.cnbc.com/2026/02/06/ai-anthropic-tools-saas-software-stocks-selloff.html
[4] https://www.cnbc.com/2026/02/04/software-experiencing-most-exciting-moment-as-ai-fears-hammer-stocks.html
[5] https://finance.yahoo.com/news/us-software-stocks-hit-anthropic-154249835.html
[6] https://finance.yahoo.com/quote/IGV/
[7] https://www.axios.com/2026/02/07/ai-software-anthropic-losses-stock-market
[8] https://www.benzinga.com/markets/tech/26/02/50386984/software-sector-crash-ai-disruption-stocks-falling-the-most
[9] https://investor.salesforce.com/news/news-details/2025/Salesforce-Delivers-Record-Third-Quarter-Fiscal-2026-Results-Driven-by-Agentforce—Data-360/default.aspx
[10] https://futurumgroup.com/insights/servicenow-q4-fy-2025-earnings-highlight-ai-platform-momentum/
[11] https://fortune.com/2026/02/04/why-saas-stocks-tech-selloff-freefall-like-deepseek-2025-overblown-paradox-irrational/
[12] https://www.cnbc.com/2026/01/29/software-stocks-enter-bear-market-on-ai-disruption-fear-with-servicenow-plunging-11percent-thursday.html
[13] https://stockanalysis.com/stocks/ddog/statistics/
[14] https://www.meritechcapital.com/blog/2022-saas-crash
[15] https://www.cnbc.com/2025/01/27/nvidia-shares-fall-sharply-on-deepseek-fears.html
[16] https://fortune.com/2026/02/06/software-selloff-bubble-dotcom-era-deutsche-bank/
[17] https://fortune.com/2026/02/06/software-selloff-bubble-dotcom-era-deutsche-bank/

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