Market Update: Putting Today’s Volatility and the AI “Bubble” Narrative into Perspective

Over the past several days, markets have pulled back roughly 4% from the all-time highs reached in late October. At the same time, media headlines have amplified fears that the recent excitement around artificial intelligence (AI) is a “bubble” that’s bursting.

Given this backdrop, we wanted to share clear perspective on what’s happening, why it’s happening, and how your financial plan is built to navigate periods just like this.

Short-Term Volatility Is Normal, Even After Strong Years

Pullbacks of 5–10% occur regularly, even within strong bull markets. In fact, it would be unusual not to see some volatility after such a significant run-up in equity prices this year.

More speculative assets, such as Bitcoin or certain AI focused individual stocks, have declined far more sharply, in some cases over 30% from recent highs, but these movements are a reflection of leverage and speculation, not of the broader economic or market environment. Your core diversified portfolio may not be built around those types of risks.

Addressing the AI “Bubble” Conversation Directly

Much of the anxiety today comes from headlines warning that artificial intelligence stocks are in a bubble. It’s important to step back and take a more informed view.

Our viewpoint is that AI is a general-purpose technology, closer to electricity, the internet, or the personal computer, than a fleeting trend. Technologies of this magnitude reshape entire economies and unlock waves of productivity and innovation.

When major technological breakthroughs emerge, the same pattern tends to appear:

Massive investment pours in because even if many companies fail, the long-term winners can deliver exponential returns.
An intense arms race develops among leading firms, pushing rapid advancement in engineering talent, compute power, data centers, and energy resources.
Volatility increases because not every company will succeed, and markets reprice that reality in real time.
Speculation appears at the edges, including companies exaggerating their AI capabilities to attract capital.
External risks such as regulation, geopolitics, and supply chain constraints—introduce additional noise but do not alter the long-term trajectory.

This is how innovation cycles have always worked. Some companies thrive. Others fail. But the economic progress driven by the technology itself continues.

In our view, the enthusiasm for AI today is not irrational speculation. It is the market recognizing that AI has the potential to:

Meaningfully improve productivity
Enhance decision-making and efficiency across industries
Accelerate breakthroughs in health care, science, and education
Raise the long-term capacity for economic growth

Short-term volatility does not change that long-term story.

History Shows There Is Always a Reason to Sell

Over the past 50 years, there has always been something in the headlines capable of triggering fear: recessions, inflation, geopolitical conflicts, pandemics, elections, and now AI.

Yet the greatest risk to long-term wealth has never been short-term market declines.

It’s the emotional decision to abandon a sound plan during periods of uncertainty.

It’s completely normal to feel unsettled. But acting on those emotions, especially after a modest pullback, is where long-term damage can occur. Investors who stay disciplined capture the compounding that builds wealth. Those who don’t often miss the strongest days of recovery, which historically tend to occur nearest to the worst market days.

How Prosperity Portfolios Are Built for Times Like This

Our investment committee structures portfolios with intention, including:

Exposure to long-term innovation and economic growth, including the transformative impact of AI.
Diversification across sectors, geographies, and asset classes to avoid overconcentration.
Risk management designed to weather short-term volatility while preserving long-term potential.
A disciplined process focused on capturing long-term compounding rather than chasing short-term noise.

This balanced approach allows investors like you to benefit from technological progress with an institutional eye on speculative risk.

Why The Bucket Plan® Matters Right Now

The Bucket Plan® is specifically designed for environments like the one we’re experiencing today.

By structuring your assets into Now, Soon, and Later buckets, we help ensure:

Your short-term needs are protected.
Your intermediate-term goals are insulated from market swings.
Your long-term investments stay invested through periods of volatility and innovation cycles.

This structure can reduce the temptation to react emotionally to headlines and helps keep your plan on track through a wide range of market conditions.

Looking Ahead

We remain optimistic about the long-term opportunities AI is creating across the economy. Short-term volatility is part of the journey, not a sign that the long-term story has changed.

Thank you for your continued trust. We’re here to help you navigate periods like this with clarity, discipline, and confidence.

If you have any questions about your portfolio, or how your plan aligns with your short-term, intermediate-term, and long-term goals, please don’t hesitate to reach out.

¹ Source: J.P. Morgan Asset Management research, as reported by CNBC, April 2025