The AI ​​revolution is hotter than ever — but investors should be realistic about its timeline.

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Investors are jumping into AI trading again – but those looking for a quick return should think twice.

Shares of Nvidia ( NVDA ) hit record intraday highs ahead of its 10-for-1 stock split this week, while new product announcements fueled the likes of AMD ( AMD ) , c3.AI ( AI ) , and Super Micro ( SMCI ) . Stocks have fueled demand. ).

Despite Wall Street's unbridled enthusiasm around new technology, a reality check may be necessary. I spoke to top business leaders at Bank of America's Global Technology Conference earlier this week, who are warning against unrealistic expectations.

Nutanix ( NTNX ) CEO Rajeev Ramaswamy told me that while he's excited about the revolutionary technology, “AI investment has outpaced reality.”

There must be a sound business case to justify the cost of an AI investment. There is a bit of a disconnect between the two right now,” said Ramaswamy.

While there are numerous applications for AI — from text and video generation to demand forecasting for supply chains — many tech companies have yet to see tangible returns from their AI investments. Meanwhile, building AI applications, which require intense computing power, is expensive.

“There are good use cases. I'm not suggesting there aren't good use cases … we just have to make sure they're economically viable,” Ramaswamy added.

Meanwhile, Pure Storage ( PSTG ) founder John Colgrove suggested that it's important to maintain a realistic timeline for AI's expected impact on real life. He cautioned that expectations are “excessive” in the short term.

“AI is going to be transformative, but it's going to take a little longer than people think. What they think will happen in the next 10 years will probably take 25 years,” Colegrove said.

“It's going to happen, but it takes a little longer to build the infrastructure and really get the effects everywhere.”

On the startup front, excitement is already building. After several consecutive quarters of massive increases, VC deal value for pre-seed and seed-stage AI startups is beginning to decline.

The deal was worth $122.9 million in the first quarter, down 76 percent from a peak in the third quarter of 2023, according to the latest data from PitchBook.

Driving factors are profitability questions.

For investors trying to navigate the hype surrounding AI, there are still reasons to increase exposure, even with expectations of a “backward effect,” according to State Street's Michael Aron. .

Investing in companies “laying the foundation for mass adoption” is the best way to play AI, Irwin told Yahoo Finance. These are the companies behind the data centers, GPUs, software and cloud services – providing the essential tools supporting the AI ​​revolution.

“We really need to move from the AI ​​potential to the practical implications of AI … and while there will be a “ripple effect” for companies to incorporate AI technology into their products, early adopters of infrastructure and Foundations are the winners, advises Arone.

“The winners and losers will become clearer as we move forward,” he added.

Sienna Smith Yahoo is an anchor in finance. Follow Smith on Twitter. @SeanaNSmith. Suggestions on deals, mergers, worker conditions, or anything else? Email seanasmith@yahooinc.com.

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