Tech firms worry over delayed returns from AI boom
With over $100 billion poured into the global AI rush, slow enterprise adoption and sky-high tech valuations spark fears of an impending bubble burst amid memories of dot-com burst
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Bengaluru: Global AI wave faces the risks of collapse unless huge investments pumped into developing AI-enabled products start giving returns to investors. According to industry experts, much is riding on the AI wave with the current hype not able to match real delivery. They said that enterprise adoption has been slow of the AI-powered platforms and solutions, posing the risks of delay in return for investors.
“Enterprises are adopting AI, albeit slowly. That is the reason that investors have started questioning the rationale behind pumping in billions. However, AI is trend, which is going to stay as it is a deeply transformative technology,” said an industry source.
According to reports, private AI investment in the US has reached $109.1 billion, which has been leading the current AI wave. From chip production, data centre to AI-powered platforms, AI space is witnessing massive inflows from both retail and institutional investors.
Interestingly, the US market, which has seen record levels, has been much driven by the top technology stocks. This week, the market cap of Nvidia touched $5 trillion level fuelled by AI boom. At such valuation, Nvidia’s market cap was just below the GDP of the US and China.
Not only Nvidia, but all frontline technology stocks have seen huge upside on the back of AI-fuelled investment flow. Such valuation has raised concerns over bubble building up in the whole investment ecosystem.
Recently, IMF has said that valuations now resemble those seen before the dot-com crash. Dot-com crash had seen many internet companies going belly up, while investors losing huge amount globally.
According to experts, if the hype around AI doesn’t yield adequate return, then the stock market in the US will be negatively impacted.
This will have serious impact on the US economy, which is leading the show in terms of AI development.
However, many feel that India may not see much disruption owing to the slow pace of AI development.
“Indian IT firms realise that companies will require support in terms of deployment of AI-powered solutions and platforms. In that way, the industry is waiting for more AI investment from enterprises,” Pareekh Jain, an IT outsourcing advisor & founder, Pareekh Consulting, told Bizz Buzz. He said that Indian technology firms’ mostly operate in services space, while AI wave is rewarding the product firms.
