The Big Short (2015) chronicles the 2007–2008 housing bubble collapse, following several investors who predicted the crash. The Big Shift (2035) will chronicle the AI forest fire of 2030, following several founders who benefited as capital rotated out of horizontal AI and into the economy at large.
In nature, a wildfire clears the forest floor, allowing sunlight to reach the ground and recycling nutrients back into the soil for new flora to thrive. Similarly, the upcoming AI forest fire will clear out some of the big AI companies and allow plenty of smaller, real-world AI companies to thrive.
Despite all the AI bubble talk right now, I don't think there's an AI bubble that is set to burst. I've put my money where my mouth is: I'm heavily invested in private and public AI and AI infrastructure companies, and while I don't think we'll see a crash like in 2008, I do think we are one burnout away from a reckoning. At least one high-profile company won't make it because it's relying on tranches of investor capital to sustain an unprofitable business model while trying to take over the world. There are multiple such companies, and if just one flames out, the whole forest will quickly burn to the ground.
The AI reckoning coming for VC and PE
This fire will also lead to a reckoning in AI valuations, which frankly would be healthy. Some of these investment dollars should instead go toward more innovative players in real-world sectors that VCs have largely abandoned since 2021. According to the OECD, VC investments in AI companies made up 61% of all VC investments in 2025 globally, double the 30% share they had in 2022.
A lot of this boils down to the venture hype cycle that impacts startup valuations. The 2021 vintage from the COVID era was highly overvalued, followed by OpenAI launching ChatGPT in 2022, which only further accelerated the trajectory in an unhealthy way.
Fast forward to today, and many of the world's largest private equity companies are down to 52-week lows, despite their trillions of dollars in assets under management. Part of this is a hangover from the SaaSpocalypse, which highlights a decade of private equity over-indexing on debt-fueled software companies that are not going to make it.
Over the next few years, there's going to be a reckoning in the private credit and private venture backing of AI companies, which to date have experienced a state of euphoria. It's already started happening with SaaS, but it's going to spread into the horizontal AI companies, which will cause a restructuring of company valuations and make investors think twice about investing 90% of their dollars into one sector. There's going to be a lot more consolidation and M&A, not to mention many debt-filled companies that simply don't survive. There are a lot of zombie unicorns out there. Many will start dropping dead, meaning their stakeholders will have to take markdowns and losses on their balance sheets. They're not going to just keep pumping money into dead unicorns.
I get that the venture model pushes everyone to chase the big winners, leading to an inordinate amount of money going into a handful of horizontal AI players, but I'm advocating for a smarter and healthier distribution of dollars tied to solutions that will propel us into the 2030s. The companies that are solving real-world infrastructure problems will likely still have some AI elements to them, but trying to build the next OpenAI is a failed proposition. For example, Gartner forecasts that agentic AI in supply chain management alone will grow from less than $2 billion in 2025 to $53 billion by 2030. I'm trying to balance being an environmentalist and a raging capitalist; I believe there's a huge market opportunity for climate tech and physical world investments, from solar energy to data center cooling.
On Blackstone's most recent quarterly earnings call, CEO Stephen Schwarzman talked about physical world opportunities: “At the same time, the firm has significant exposure to physical assets which we believe are well insulated from disruption and benefit from their own positive tailwinds, including logistics, residential real estate, transportation and communications infrastructure, and many forms of asset-based credit. We also own fast-growing franchise businesses that are effectively royalty streams on physical assets, alongside a significant portfolio in the health care and industrial sectors. Overall, we believe Blackstone is extraordinarily well positioned for an AI-enabled future.”
It's no wonder that Blackstone is the largest investor in AI-related infrastructure globally. The infrastructure builders are more promising than the horizontal players. This is what VC and PE is missing: the picks and shovels play.
PR and media play an important role
I also like the picks and shovels play from a PR perspective. At Treble, we're placing a strategic bet on vertical AI, like our clients LogicMonitor and SymphonyAI, over horizontal AI, which is heavily saturated. Unless you're an OpenAI or an xAI with a Sam Altman or an Elon Musk at the helm, it's extremely difficult to differentiate yourself from a brand perspective.
Meanwhile, there's an opportunity for brand differentiation and for lower PE ratios that lead to healthier, more profitable companies. I'm not saying that there can't be another Amazon that effectively runs in the red for extended periods of time, but the market right now is priced to perfection; the expectation is that every single one of these bets is going to hit. As storytellers, we know that's not how this story will go.
From an earned media standpoint, physical AI oftentimes leads to much more interesting stories for journalists to tell. Physical AI is not about us sitting down at our computers and burning more compute power to process our queries. Physical AI is not about speeds and feeds. It's tangible. It's a robot sorting waste or a sensor preventing a power grid failure. It's about companies solving problems that are going to significantly impact our world.
As an agency, we also especially love working with builders. While the media space has certainly experienced layoffs, media outlet consolidation, and reporters quitting to start their own newsletters, there is still a plethora of vertical trade publications and reporters that cover these traditional industries. I'm talking from manufacturing to healthcare to government to other sectors that need innovation. For these types of companies, chasing the OpenAI model will not work.
I'm a proponent of AI applied to real-world sectors, from industrial to energy, where we can compete and win. I'm also bullish on these areas because the market is overhyping the horizontal AI companies. The companies that are solving real-world, difficult problems are flying completely under the radar. They are struggling to get investor and media attention, which presents an opportunity.
Investors and entrepreneurs should lead the shift
AI investment and AI adoption are just getting started. Gartner predicts that by 2030, over 80% of enterprises will deploy industry-specific AI agents in support of critical business objectives, up from less than 10% in 2025. VCs and future entrepreneurs have a massive opportunity over the next few years, whether there's an AI wildfire or not.
Investors currently seem to be following a strategy of going all in on the perceived market winners, doubling and tripling down with obscene amounts of late-stage capital. That approach either hits big or misses big. Right now, it's hitting, so enjoy that, but there's a huge opportunity for funds to have successful investment carve-outs into profitable businesses that can go public and solve real-world problems.
This also happens to be a winning strategy. It's healthier from a fiscal and a valuation perspective. You know the companies that go on Shark Tank asking for $500,000 in exchange for 5%? That's the stage we're in now with horizontal AI.
Meanwhile, some vertical AI companies are being completely slept on. There's an opportunity for them to step up. That's what Treble will do: work with these companies and even potentially invest in them.
For entrepreneurs, this is also a call to action. In a rapidly changing world, where jobs are consolidating and shifting, entrepreneurship remains attractive. You should look to solve the problems that are right in front of you, like simply building existing things in a new and sustainable way. We need more companies such as:
- Patagonia, which uses recycled materials and encourages the repair of its clothing
- Framework, which manufactures modular and repairable laptops
- AMP, which uses AI and robotics to sort municipal solid waste
Instead of trying to be the next Bezos or Altman, be inspired to have a vision where capitalism and environmental sustainability can co-exist. The next decade belongs to the entrepreneurs who are solving problems that stand to benefit humanity and the Earth by solving issues in the physical world, from the forest floor to the sun.
(A previous version of this column appeared at Unite.AI.)