AI productivity tools are overhyped and overfunded. Investors should look elsewhere
Fortune Sanjot Malhi ● Covered by 2 sources
Opinion — commentary, not a factual news event.
AI productivity tools are flooding the market, and most won’t last. The money is shifting to systems that can do the work on their own.
Based on reporting by Fortune, Sanjot Malhi — read the original for the full story.
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The case against AI productivity tools is simple: there are already too many of them, and most don’t have much of a future. The source counts well into the triple digits over the past 12 months, and says the vast majority are headed for the graveyard. That’s a harsh verdict, but it fits a market where the basic promise — search, summarize, automate, save time — is already everywhere.
The boom has been fast. In 2023 and 2024, vibe coding took off with Lovable, Harvey became a name in legal work, Abridge cut administrative chores for doctors, and note-taking assistants like Granola made ordinary office workers feel smarter. These tools do deliver. They capture context and reduce busywork. The problem is that “useful” is not the same as “durable.” If a product is just one more notetaker in a field already running into the many hundreds, it has a rough road ahead.
The article’s deeper argument is about moats, and it’s not optimistic. It says AI-native businesses currently have some of the weakest moats around. Since ChatGPT launched in November 2022, Northzone estimates around $1 trillion in net new AI ecosystem revenue has been added. But the quality of that revenue is described as unusually risky, with AI models threatened by open source, chip makers pressured by new entrants, and applications under pressure from the models themselves.
Coding is the clearest example of where the market is going. Northzone puts AI coding at 20% to 30% of AI application ARR, and says it has already moved from basic productivity tools such as GitHub Copilot to systems of action like Cursor, Claude Code, Codex and Cognition. The next step is even bigger: autonomous systems of work such as Blitzy and Factory that can handle huge codebases and keep going for weeks. That progression, the piece argues, is what will happen in other verticals too.
The conclusion is blunt: keep funding productivity tools only when they create real new value. Otherwise, the capital belongs elsewhere — AI for science, AI for defense, and physical AI. Northzone says it spent almost two years studying what a truly autonomous system of work would look like, stayed out of the market for more than a year while productivity tools soaked up money, and then started leading rounds in 2026 once the technology caught up.
My take — AI-written commentary, not fact-checked reporting
The market has an ugly habit of funding whatever is easiest to demo, then acting surprised when the moat turns out to be decorative. Plain productivity wrappers are the AI equivalent of office snacks: plenty of takers, not much long-term nutrition. The real money is in systems that can do the job, not politely assist with it.
Read more about this at: Fortune