The Hype Cycle Trap: Why AI is Both Overrated and Underestimated

If you feel like the current conversation around AI is reaching a fever pitch, you are right. We are deep in the "Rapid Scaling and Hype" phase. It is the part of the cycle where the narrative is dominated by what is possible, while the reality of what is practical gets pushed to the background.

This is not a new phenomenon. In fact, it is a predictable pattern that has repeated itself for over a century.

A Familiar Roadmap

I use a framework called the Tech Hype Cycle to evaluate new tools. It is a lens that looks at history to predict the future. Every major shift - from the internet and automobiles to electricity and aviation - follows a remarkably similar five-stage journey.

Take the internet, for example. In the late 90s, the focus was entirely on connectivity and the "new economy." Investment poured in, and companies scaled at a breakneck pace. But as it became mainstream, the risks that experts had warned about - security breaches, privacy violations, and widespread misinformation - emerged with full force. We didn't solve those problems upfront; we reacted to them only after they became too large to ignore.

We saw the same thing with cars. The early narrative was all about freedom and speed. It wasn't until millions of vehicles were already on the road that we finally prioritized standardized safety laws, seatbelts, and emissions standards.

The AI Parallel

AI is currently following this exact roadmap. We are in the phase where successes like image recognition and generative chat have captivated everyone. The focus is on the "magic" and the "wow" factor.

But we are also starting to see the cracks that always appear at this stage. We are seeing issues with bias, data privacy, and the "black box" nature of complex models. These are not just technical bugs. They are the predictable consequences of a technology scaling faster than its guardrails.

The danger of the hype cycle is that it leads to "all or nothing" thinking. During the boom, people think the tech will solve every problem. When the inevitable correction happens, they dismiss it as a failure.

Both views are wrong.

How to Navigate the Flux

The goal is not to avoid the cycle, but to understand where you are in it. At The Flux, we help our clients look past the "breakthrough illusions" of the current moment to find operational reality.

We know that a technology can be overhyped and still be deeply impactful. The internet changed the world, but not in the way the loudest voices in 1999 predicted. AI will do the same. It will disrupt labor markets and boost productivity, but the gains will be cumulative and quiet, not sudden and magical.

The real advantage in 2026 will not go to the most adventurous organizations, but to the most disciplined ones. It belongs to those who invest in people, focus on specific workflows where value is measurable, and treat AI as a system rather than a feature.

We have seen this movie before. We know how it ends. The winners are always the ones who stayed grounded while everyone else was looking at the clouds.