It definitely is. The AfD is politically impotent and will never join any government. They will get their 10%, sure, but that's complete meaningless in the grand scheme of things.
For a party that wanted to 'hunt down' (Gauland) the establishment, that is (and must be) extremely disappointing. Especially as Germany is rapidly becoming more multicultural and socially liberal.
But that's more due to shifts in the importance of issues and politcal culture adapting then an election result itself, that won't be too bad for them. I'm not too sure at the "they will never join any government" part, especially in the East. In difference to other right wing parties, that rode protest waves, they clearly have established themselves uniting the camps of Nazis, right-wing-populists, cynical market radicals and protest voters. They will clearly stay and ride the waves of backlashes against liberal democracy and diverse society, especially in the more down-trodden parts of this country. Demography will help us a bit, but they have enough youth following to not vanish, even in the long term. You are surely more optimistic, here, than I am.
