Applications of AI have suddenly become the darling of investors and the media alike in the last couple of years. Together with the new products AI is promising for such things as automation revolutions and smart solutions across industries, there come real stories about this so-called AI bubble-an introverted term that has stood for a situation in which expectation of AI has grown so much larger than its actual capabilities.

Key signals of an AI bubble include crazy startup valuations coronated with no earnings, massive speculation, and media fabricated buzz convincing the public that AI can fix anything under the sun in an instant. This somewhat reminds us of the late-1990s dot-com bubble where expectations trumped reality for investors.

It is also important for smart investors to understand where the limitations of AI lie technologically. Most AI applications, even today, deal poorly with really complex contexts, need huge data sets, and produce biased outputs. Pure hype is perhaps the highest risk for investment. Assessing startups on their track records, business model, and potential for future revenue is a smarter bet.

The best strategies for navigating the AI bubble include diversification in portfolios, evidence-based reviews, and awareness of market fluctuations. In fact, the investor has to differentiate between potential truly game-changing AI technology from merely short-term fads that burst with noise.

It's not a financial bubble but rather a technology-market psychology and social expectations bubble. Savvy investors exploit opportunities given by innovations without succumbing to the hype, understand the risks, and make rational decisions.