Investment experts globally are facing a pressing question: does the scale of capital flowing into the AI space reflect the kind of exuberance seen in past cycles such as 2021 or the dot‑com era, or does it mirror the breadth of the opportunity that lies ahead over the next decade?
Phoebe Kitchen, principal at Molten Ventures, said that from a valuation perspective, there are "certainly signs of dislocation", including intense competition, rapid funding rounds, and businesses attracting sizeable investment with comparatively limited proof points, and not all of these companies will endure in the long term.
However, she believes that compared with earlier periods of market exuberance, the current landscape feels different. "We are still at the early stages of a transformational technological wave, the kind that only emerges every few decades," she said.
"This is an era‑defining shift, comparable in scale to the rise of the internet or mobile, creating the potential to build large‑scale global companies from anywhere in the world. The difference now is that adoption is faster, more pervasive, and increasingly grounded in real enterprise demand rather than pure speculation."
Kitchen said that for investors, the central question is how to position through this transition. "The challenge is less about timing and more about discernment: identifying which companies have durable defensibility and which are chasing hype," she said.
"Traditional software metrics only go so far. Scale dynamics look different today, as AI businesses can grow bigger and faster than traditional SaaS peers.
"Investors should focus on “customer love” - the depth of adoption, user experience, distribution reach, and pace of product innovation. These are the moats that matter in the AI economy, and long‑term success will depend on how effectively companies convert technology leadership into sustained competitive advantage."
Kitchen believes that the next phase of AI will see the technology embedded across every layer, from applications to middleware, offering the chance both to "rebuild existing workflows and to reimagine new ones as we reshape our economy and infrastructure around it".
"Despite perceptions of an AI‑driven US rally leaving markets unbalanced, UK investors are not necessarily rotating homeward," she said.
Read more: 'Investors moving away from US - but not towards the UK'
"Instead, we’re seeing a natural re‑evaluation after software sell‑offs, where some valuations look overdone. Established companies with scale, strong networks, and loyal customers now have an advantage and a mandate to adapt. The story isn’t one of boom and bust, but of transformation - how enduring businesses harness this technology shift to drive the next decade of growth."
