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AI's Bar Mitzvah moment: Aswath Damodaran explains what AI means for businesses
Economic Times 1 hr ago·21 Aug 2026, 7:37 am
Valley Professor Aswath Damodaran argues that investors should stop debating whether AI is hype or a fad. Instead, he says we must evaluate the technology as a business. Damodaran outlines a four-stage lifecycle for revolutionary technologies: hype, investment, business building, and recalibration. He believes AI has moved past the initial hype phase and is now entering the business-building stage.
This shift is significant because it marks the point where actual revenues begin to emerge, but it also brings new risks. While the technology is advancing, profitability remains uncertain. Damodaran warns that significant market corrections and disruptions are still possible as the industry matures.
For investors, this means the focus must shift from speculation to fundamental analysis. It is crucial to watch for companies that can successfully navigate the business-building phase and achieve sustainable profitability. The next few years will likely be volatile as the market adjusts to the realities of integrating AI into core business operations.
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