Connect with us

Business

Crystal Ball: Will the AI bubble burst or balloon in 2026?

Published

on



Welcome to our 2026 Term Sheet Crystal Ball! This week, I’ll be publishing all your 2026 predictions, from the precise to the wacky, from an open call to all Term Sheet readers that I put out in December. We got some great answers from unicorn founders, key investors, and needle-moving executives.

Our first topic is one you know, love, and perhaps fear: AI. For the last few years, every year has been declared the year of AI. But 2025 was especially undeniable: The discourse around AI truly moved from boardrooms to kitchen tables. And we got comfortable, more or less, saying that there is an AI bubble.

The question, of course, is what happens now. How big is that bubble? What areas of AI are actually bubbly? And which companies have staying power, when all is said and done? Here’s what Term Sheet’s human readers think 2026 has in store. 

Note: Answers have been edited for clarity and brevity.

The AI bubble

The AI hype cycle will pop. 2026 marks the end of AI novelty purchasing. Companies will only pay for AI that increases revenue, reduces churn, or automates real work. The bar moves from impressive demos to measurable ROI. —Stevie Case, Vanta chief revenue officer

A lot of AI valuations will take a markdown, squeezing compensation for AI researchers at tier-one startups. The best AI companies will continue to succeed but maybe not at the extent that they’d thought. —Deedy Das, Menlo Ventures principal

For AI buyers, 2026 will be the year of ROI. The shine of “pure potential” is wearing off, and budgets will increasingly flow to products that prove value, not just promise it. —Meera Clark, Redpoint Ventures partner

The AI bubble debate will rage on. —Jai Das, cofounder, president and partner, Sapphire Ventures

AI will need to prove itself in the numbers. —Anthony Georgiades, Innovating Capital founder and general partner

The AI funding bubble will burst when short-term investors exit. The math is simple: $200 billion invested in a single year must produce multiple trillion-dollar companies within five years—outcomes that historically take decades. Investors are being given 48 hours to decide whether to invest tens of millions into a company. That time compression tells you everything about a potential bubble. —John Kim, Sendbird cofounder and CEO

By the end of 2026, the financial markets will begin to reckon with the realities of AI business models and capital will begin shifting away from the “spend at all costs” approaches of hyperscalers and foundation models. The receding tide will result in reduced valuations in 2027 in both public and private markets. —Nnamdi Okike, cofounder and managing partner, 645 Ventures

In 2026, the AI popular narrative will pivot hard from the “God model” view to the “menagerie of models’ view. Rather than one top lab with a single “God model” dominating, there will be a plethora of thousands to millions of specialized models, distillations, fine-tunes occupying various “ecological niches.” —Jared Quincy Davis, CEO and founder of Mithril

Vertical AI becomes the survivor class of the AI cycle. If the AI bubble deflates in 2026, the companies that survive will be vertical AI platforms with real margins, real customers, and real proprietary data. —Francisco Martin-Rayo, Helios AI cofounder and CEO

Sorry SF, those AI billboards aren’t going anywhere, but they will tell an interesting story next year. The freeway will act as a live scoreboard for the sector. With thousands of AI companies fighting for oxygen, the ones that stay visible—literally—might be the ones still standing. —Merrill Lutsky, founder and CEO, Graphite

Boring incumbents will steal the AI spotlight in 2026. The last two years were about who could build the biggest model. 2026 will be about who owns the weirdest, deepest, messiest data. —Fred Hoch, TechNexus Venture Collaborative cofounder and general partner 

The application layer 

Consumer AI slop backlash will lead social networks to crack down and add more guardrails around AI-created accounts and content. —Amy Wu Martin, Menlo Ventures partner

The value in AI will accrue to companies that control real workflows, real assets, and real data—not those sitting at the thin application layer. —Patrick Chun, founder and managing partner, Juxtapose

In-person connection will become a premium product category. In an AI world, real human connection will become more scarce and more valuable. Consumers and workers alike are yearning to build deep relationships. We’ll see an explosion of companies that enable richer in-person experience. —Peter Deng, general partner, Felicis

AI will earn a mixed reputation in mental-health care: hopeful, powerful—and unsettling. Its unpredictability will force a reset on where and how it’s safely used. —Liam Donohue, cofounder and managing partner, 406 Ventures

In 2026, AI products will finally cross the uncanny valley and become the new normal in many instances of human engagement. —Rudina Seseri, founder and managing partner, Glasswing Ventures

Foundation models are fine; the application layer is doomed. The juggernauts (Anthropic, OpenAI, DeepMind) are likely appropriately valued or even undervalued and will continue succeeding. The real bubble risk is in the application layer, where there are now a dozen companies doing AI-powered accounting, for example. —Kamran Ansari, Infinity Ventures venture partner and Kapital Ventures founder and managing partner

AI will dissolve the boundary between finance and operations. 2026 is no longer about models giving advice, it’s about models actually executing, within guardrails. —David Roos, Core Innovation Capital partner

Consumers will prefer AI customer service reps over humans. In 2026, a patient calling their health insurance or a traveler calling their airline will prefer to deal with an AI, instead of getting routed to a human. —Jon Keidan, founder and managing partner, Torch Capital

Agents and LLMs

2026 will mark the end of the ‘bigger is better’ era in AI. LLM and AI Agent memory will improve dramatically, allowing small, specialized models with long-term memory to replace bloated LLMs in many agentic systems. —Scott Beechuk, partner, Norwest 

2026 will undoubtedly be the year of the agent. —Stefan Miedzianowski, DeepL chief scientist

In 2026, the practical applications of agentic AI will overtake the promise of prompt-based generative AI in delivering real value to B2B enterprise applications. —Richard de Silva, founder and managing partner, Lateral Investment Management

This is the year open-source models become good enough. You don’t need to be at the frontier; for selective applications, you will start seeing a larger variety of models being used. This will make running models more cost-efficient, spurring new entrants and broader AI investment across the ecosystem. —Zach Lloyd, founder and CEO, Warp

Some 90% of AI agents fail within 30 days of deployment. The companies that succeed will be those with the best human-AI collaboration frameworks. Autonomous agents lead to more human oversight, not less. —Phelim Bradley, cofounder and CEO, Prolific

See you tomorrow, 

Allie Garfinkle
X:
@agarfinks
Email: alexandra.garfinkle@fortune.com
Submit a deal for the Term Sheet newsletter here.

Joey Abrams curated the deals section of today’s newsletter. Subscribe here.

PRIVATE EQUITY

Galileo Education, a portfolio company of Millpond Equity Partners, acquired Putnam Classical Academy, a Palatka, Fla.-based private school and New Generation Christian School, a Lake City, Fla.-based private school. Financial terms were not disclosed.

EXITS

Stonepeak agreed to acquire a majority stake in Castrol, a Berkshire, U.K.-based engine oils, industrial fluids, and greases manufacturer, from BP for $10.1 billion. 

TransDigm Group agreed to acquire Stellant Systems, a Torrance, Calif.-based designer and manufacturer of radio frequency and microwave amplification products, from Arlington Capital Partners, for $960 million.

VSE Corporation acquired Aero 3, a Bedford, N.H.-based maintenance, repair, and services provider for aircraft wheels and brakes, from GenNx360 Capital Partners, for $350 million.

Advance Technologies System agreed to acquire Conexus, a Rome, Italy-based designer, constructor, and maintainer of power transmission and distribution infrastructure, from Mutares. Financial terms were not disclosed.

Michelin agreed to acquire Tex-Tech Industries, a Kernersville, N.C.-based designer and manufacturer of textiles and fabrics for the aerospace, space, and defense & security industries, from Arlington Capital Partners. Financial terms were not disclosed.

OTHERS

Legence Corp. acquired The Bowes Group, a Beltsville, M.D.-based provider of mechanical, plumbing, and process system solutions, for $325 million. 

MetLife Investment Management acquired PineBridge Investments, a New York City-based asset manager. Financial terms were not disclosed.



Source link

Continue Reading

Business

If Trump takes Greenland, he must build a welfare state ‘that he doesn’t want for his own citizens’

Published

on



U.S. President Donald Trump wants to own Greenland. He has repeatedly said the United States must take control of the strategically located and mineral-rich island, which is a semiautonomous region that’s part of NATO ally Denmark.

Officials from Denmark, Greenland and the United States met Thursday in Washington and will meet again next week to discuss a renewed push by the White House, which is considering a range of options, including using military force, to acquire the island.

Trump said Friday he is going to do “something on Greenland, whether they like it or not.”

If it’s not done “the easy way, we’re going to do it the hard way,” he said without elaborating what that could entail. In an interview Thursday, he told The New York Times that he wants to own Greenland because “ownership gives you things and elements that you can’t get from just signing a document.”

Danish Prime Minister Mette Frederiksen has warned that an American takeover of Greenland would mark the end of NATO, and Greenlanders say they don’t want to become part of the U.S.

This is a look at some of the ways the U.S. could take control of Greenland and the potential challenges.

Military action could alter global relations

Trump and his officials have indicated they want to control Greenland to enhance American security and explore business and mining deals. But Imran Bayoumi, an associate director at the Atlantic Council’s Scowcroft Center for Strategy and Security, said the sudden focus on Greenland is also the result of decades of neglect by several U.S. presidents towards Washington’s position in the Arctic.

The current fixation is partly down to “the realization we need to increase our presence in the Arctic, and we don’t yet have the right strategy or vision to do so,” he said.

If the U.S. took control of Greenland by force, it would plunge NATO into a crisis, possibly an existential one.

While Greenland is the largest island in the world, it has a population of around 57,000 and doesn’t have its own military. Defense is provided by Denmark, whose military is dwarfed by that of the U.S.

It’s unclear how the remaining members of NATO would respond if the U.S. decided to forcibly take control of the island or if they would come to Denmark’s aid.

“If the United States chooses to attack another NATO country militarily, then everything stops,” Frederiksen has said.

Trump said he needs control of the island to guarantee American security, citing the threat from Russian and Chinese ships in the region, but “it’s not true” said Lin Mortensgaard, an expert on the international politics of the Arctic at the Danish Institute for International Studies, or DIIS.

While there are probably Russian submarines — as there are across the Arctic region — there are no surface vessels, Mortensgaard said. China has research vessels in the Central Arctic Ocean, and while the Chinese and Russian militaries have done joint military exercises in the Arctic, they have taken place closer to Alaska, she said.

Bayoumi, of the Atlantic Council, said he doubted Trump would take control of Greenland by force because it’s unpopular with both Democratic and Republican lawmakers, and would likely “fundamentally alter” U.S. relationships with allies worldwide.

The U.S. already has access to Greenland under a 1951 defense agreement, and Denmark and Greenland would be “quite happy” to accommodate a beefed up American military presence, Mortensgaard said.

For that reason, “blowing up the NATO alliance” for something Trump has already, doesn’t make sense, said Ulrik Pram Gad, an expert on Greenland at DIIS.

Bilateral agreements may assist effort

U.S. Secretary of State Marco Rubio told a select group of U.S. lawmakers this week that it was the Republican administration’s intention to eventually purchase Greenland, as opposed to using military force. Danish and Greenlandic officials have previously said the island isn’t for sale.

It’s not clear how much buying the island could cost, or if the U.S. would be buying it from Denmark or Greenland.

Washington also could boost its military presence in Greenland “through cooperation and diplomacy,” without taking it over, Bayoumi said.

One option could be for the U.S. to get a veto over security decisions made by the Greenlandic government, as it has in islands in the Pacific Ocean, Gad said.

Palau, Micronesia and the Marshall Islands have a Compact of Free Association, or COFA, with the U.S.

That would give Washington the right to operate military bases and make decisions about the islands’ security in exchange for U.S. security guarantees and around $7 billion of yearly economic assistance, according to the Congressional Research Service.

It’s not clear how much that would improve upon Washington’s current security strategy. The U.S. already operates the remote Pituffik Space Base in northwestern Greenland, and can bring as many troops as it wants under existing agreements.

Influence operations expected to fail

Greenlandic politician Aaja Chemnitz told The Associated Press that Greenlanders want more rights, including independence, but don’t want to become part of the U.S.

Gad suggested influence operations to persuade Greenlanders to join the U.S. would likely fail. He said that is because the community on the island is small and the language is “inaccessible.”

Danish Foreign Minister Lars Løkke Rasmussen summoned the top U.S. official in Denmark in August to complain that “foreign actors” were seeking to influence the country’s future. Danish media reported that at least three people with connections to Trump carried out covert influence operations in Greenland.

Even if the U.S. managed to take control of Greenland, it would likely come with a large bill, Gad said. That’s because Greenlanders currently have Danish citizenship and access to the Danish welfare system, including free health care and schooling.

To match that, “Trump would have to build a welfare state for Greenlanders that he doesn’t want for his own citizens,” Gad said.

Disagreement unlikely to be resolved

Since 1945, the American military presence in Greenland has decreased from thousands of soldiers over 17 bases and installations to 200 at the remote Pituffik Space Base in the northwest of the island, Rasmussen said last year. The base supports missile warning, missile defense and space surveillance operations for the U.S. and NATO.

U.S. Vice President J.D. Vance told Fox News on Thursday that Denmark has neglected its missile defense obligations in Greenland, but Mortensgaard said that it makes “little sense to criticize Denmark,” because the main reason why the U.S. operates the Pituffik base in the north of the island is to provide early detection of missiles.

The best outcome for Denmark would be to update the defense agreement, which allows the U.S. to have a military presence on the island and have Trump sign it with a “gold-plated signature,” Gad said.

But he suggested that’s unlikely because Greenland is “handy” to the U.S president.

When Trump wants to change the news agenda — including distracting from domestic political problems — “he can just say the word ‘Greenland’ and this starts all over again,” Gad said.



Source link

Continue Reading

Business

The ‘Holy Grail of comic books’ once owned by Nicolas Cage sells at auction for a record $15 million

Published

on



A rare copy of the comic book that introduced the world to Superman and also was once stolen from the home of actor Nicolas Cage has been sold for a record $15 million.

The private deal for “Action Comics No. 1” was announced Friday. It eclipses the previous record price for a comic book, set last November when a copy of “Superman No. 1″ was at sold at auction for $9.12 million.

The Action Comics sale was negotiated by Manhattan-based Metropolis Collectibles/Comic Connect, which said the comic book’s owner and the buyer wished to remain anonymous.

The comic — which sold for 10 cents when it came out in 1938 — was an anthology of tales about mostly now little-known characters. But over a few panels, it told the origin story of Superman’s birth on a dying planet, his journey to Earth and his decision as an adult to “turn his titanic strength into channels that would benefit mankind.”

Its publication marked the beginning of the superhero genre. About 100 copies of Action Comics No. 1 are known to exist, according to Metropolis Collectibles/Comic Connect President Vincent Zurzolo.

“This is among the Holy Grail of comic books. Without Superman and his popularity, there would be no Batman or other superhero comic book legends,” Zurzolo said. “It’s importance in the comic book community shows with his deal, as it obliterates the previous record,” Zurzolo said.

The comic book was stolen from Cage’s Los Angeles home in 2000 but was recovered in 2011 when it was found by a man who had purchased the contents of an old storage locker in southern California. It eventually was returned to Cage, who had bought it in 1996 for $150,000. Six months after it was returned to him, he sold it at auction for $2.2 million.

Stephen Fishler, CEO of Metropolis Collectibles/Comic Connect, said the theft eventually played a big role in boosting the comic’s value.

“During that 11-year period (it was missing), it skyrocketed in value.,” Fishler said “The thief made Nicolas Cage a lot of money by stealing it.”

Fishler compared it to the theft of Mona Lisa, which was stolen from the Louvre museum in Paris in 1911.

“It was kept under the thief’s bed for two years,” Fishler noted. “The recovery of the painting made the Mona Lisa go from being just a great Da Vinci painting to a world icon — and that’s what Action No. 1 is — an icon of American pop culture.”



Source link

Continue Reading

Business

Trump order says Venezuelan oil money is being held by US for ‘governmental and diplomatic purposes’

Published

on



President Donald Trump’s new executive order on Venezuelan oil revenue is meant to ensure that the money remains protected from being used in judicial proceedings.

The executive order, made public on Saturday, says that if the funds were to be seized for such use, it could “undermine critical U.S. efforts to ensure economic and political stability in Venezuela.”

The order comes amid caution from top oil company executives that the tumult and instability in Venezuela could make the country less attractive for private investment and rebuilding.

“If we look at the commercial constructs and frameworks in place today in Venezuela, today it’s uninvestable,” said Darren Woods, CEO of ExxonMobil, the largest U.S. oil company, during a meeting convened by Trump with oil executives on Friday.

During the session, Trump tried to assuage the concerns of the oil companies and said the executives would be dealing directly with the U.S., rather than the Venezuelan government.

Venezuela has a history of state asset seizures, ongoing U.S. sanctions and decades of political uncertainty.

Getting U.S. oil companies to invest in Venezuela and help rebuild the country’s infrastructure is a top priority of the Trump administration after the dramatic capture of now-deposed leader Nicolás Maduro.

The White House is framing the effort to “run” Venezuela in economic terms, and Trump has seized tankers carrying Venezuelan oil, has said the U.S. is taking over the sales of 30 million to 50 million barrels of previously sanctioned Venezuelan crude, and plans to control sales worldwide indefinitely.

“I love the Venezuelan people, and am already making Venezuela rich and safe again,” Trump, who is currently in southern Florida, wrote on his social media site on Saturday. “Congratulations and thank you to all of those people who are making this possible!!!”

The order says the oil revenue is property of Venezuela that is being held by the United States for “governmental and diplomatic purposes” and not subject to private claims.

Its legal underpinnings are the National Emergencies Act and the International Emergency Economic Powers Act. Trump, in the order, says the possibility that the oil revenues could be caught up in judicial proceedings constitutes an “unusual and extraordinary threat” to the U.S.



Source link

Continue Reading

Trending

Copyright © Miami Select.