When the AI wave crashes: What history, behaviour and markets tell us

A pro-human starting point.I feel like I should start this article with something important because it really shapes the entire conversation. I’m not anti-AI, and I’m not here to tell anyone to slow down or retreat. I use AI every day, whether it’s in strategy, analysis, creative thinking, or the work I do with leadership teams. So this isn’t about resisting technology by any stretch of the imagination. It’s about recognising something much more human.AI is accelerating at a speed we’ve never witnessed; that’s not new, and I think we are all very aware of this point. Yet, the emotional and cognitive capacity inside many organisations isn’t moving at the same pace. That imbalance is where we see real risk showing up. Not because AI is unstable, but because the humans behind it are carrying more insecurity, exhaustion, and pressure than they realise.When I look at the emotional atmosphere surrounding AI, the urgency, the excitement, the anxiety, the expectation to be early rather than right, it reminds me of something some of us have already lived through before. The dot-com era was not only a financial bubble, but also an emotional one. And those same emotional fingerprints are unfortunately showing up again.The wave we’re ridingThere is no question we’re in the middle of a powerful wave. Businesses feel an almost compulsory pull toward AI, boards want to know where it fits, investors want to see it in the narrative, teams assume it will solve pressure that has been building for years and leaders, many of whom have always trusted their instincts, are quietly asking themselves whether those instincts even still matter.It’s a wave built not just on amazing progress, but on mixed emotions, with excitement tangled with insecurity, opportunity mixed with fear of irrelevance, and momentum without much maturity underneath it. And it’s all of that which defines waves. They rise fast, they look unstoppable, and they feel energising until the foundation beneath them shifts.What the dot-com era really taught usIf we revisit the dot-com period, which we can do now with clear eyes, it’s tempting to view this moment today as a financial anomaly. But the real lesson may sit a little deeper than revenue models or stock prices. The crash didn’t happen because the technology failed; the internet went on to reshape the entire world. It happened because human behaviour inflated the moment way beyond what reality could support.People overestimated what the technology could deliver in the short term, and they underestimated the complexity required to sustain it. They confused narrative with truth and speed with intelligence.There was a collective willingness to prioritise hype over fundamentals, and once confidence wavered, everything built upon it began to unravel quickly. That’s what makes the dot-com era super relevant today: it’s not the economics, but the psychology.The patterns reappearing todayWhen I speak with retailers, founders, and senior leaders now, I can sense similar patterns resurfacing, albeit in a more fragile context. There is a growing trust in AI’s coherence without enough scrutiny of the reasoning behind it. Strategy is slowly shifting from exploration and tension into templated outputs and quick answers. Perhaps people feel they have less time to think, less space to question, and less confidence to challenge the direction.At the same time, insecurity is also rising quietly. No leader wants to be the one who falls behind, I get it, but where it’s leading us is making decisions that become performative rather than considered. Organisations adopt AI because “everyone else is,” not because they understand how it fits their identity or long-term direction. And while all of this is happening, the workforce beneath those decisions is already carrying burnout, a feeling of uncertainty and instability.This is exactly the emotional terrain where systems become vulnerable.The market conditions beneath the emotionBehaviour doesn’t create collapse on its own, but it does become dangerous when it sits on top of economic pressure, and the foundation beneath the AI wave is undeniably strained.Tech giants now account for more than 70 per cent of the US GDP in market capitalisation. Global AI investment has surged past US$200 billion. Hyperscalers are proposing trillion-dollar infrastructure plans based more on projected belief than current reality. Alongside all of this, we’re seeing household debt peak, corporate debt stretch, and retail layoffs return to their highest levels in decades.What makes this more concerning than the early 2000s is that we are entering this moment emotionally depleted with lower trust in institutions, higher political volatility, and a workforce that is stretched thin. The margin for error for me is far smaller than most people realise.Why an AI wave crash would hit differentlyJust so we are clear, I’m not forecasting that the AI wave will collapse. The technology has real value and will continue to shape the future. However, if confidence were to break even temporarily, the impact would be significantly different from what we saw during the dot-com crash, because the environment has changed so much.Back then, most failing companies were peripheral. Today, the core of global infrastructure is tied to AI, cloud computing, logistics networks, payments, cybersecurity, and e-commerce, all of which depend on a small group of companies whose value is closely tied to AI’s momentum.AI isn’t just a product anymore; it sits inside the systems we rely on. If this wave cracked, it wouldn’t be websites disappearing but a massive disruption in the foundations that make modern life function.Layered on top of that is something new: humans today are more burnt out, more distrustful than ever before, and more digitally overwhelmed than they were twenty years ago. Fear spreads faster now, and panic moves at the speed of a timeline refresh, not a newspaper cycle.A shock that once took weeks could basically unfold in hours.The real root cause isn’t technologicalThis, for me, brings us to the core truth that leaders probably need to keep front-of-mind: It’s not the technology that’s the problem, it’s the humans behind it.Every major collapse we’ve lived through has followed the same emotional arc. We overestimate what technology can solve, and we underestimate what humans need to navigate it. We remove tension from decisions and then lose the clarity that very tension provides. We then confuse coherence with correctness, and we mistake acceleration for progress.AI isn’t exposing technological fragility, by the way, all it’s doing is really exposing human fragility.Where our leaders need to look nextThis moment doesn’t require a prediction or a neat solution. What it needs is really just awareness, awareness of the subtle signals that determine whether organisations stay grounded while everything around them continues to accelerate.Leaders need to pay much more attention to the emotional condition inside their teams, because decisions made from insecurity ripple far beyond the moment they’re made. They need to pay attention to whether their thinking is strengthening or collapsing into convenience, and they must watch how quickly brands are becoming indistinguishable from one another as tools standardise creativity. And they need to recognise and realise how emotionally stretched consumers are, because retail always feels the impact of that first.Above all, and perhaps I’m going on too much, leaders need to acknowledge the widening gap between the speed at which machines operate and the pace at which humans are built to process change. That, for me, is the massive gap where mistakes happen, where identity erodes, and where judgment weakens.Closing reflectionThe AI wave will rise and shift. That’s a fact. It will break and reform in new ways we have not thought of yet, but I guess that’s the nature of waves. But organisations can remain strong and standing, and many will if they don’t rush the hardest or automate the most. They will be the ones who kept their thinking intact while everything around them sped up, and it will be a result of understanding their own emotional defaults, as well as understanding the technology in front of them.It’s simple: AI won’t collapse the economy. Humans will, especially if we repeat the same emotional patterns we’ve done before.And right now is precisely the moment we need to pay attention.Further reading: Australian retailers race ahead with AI but risk aversion threatens momentum.