The head of Japanese IT firm NTT DATA said that a potential artificial intelligence bubble will deflate faster than past tech cycles but give way to an even stronger rebound as corporate adoption catches up with infrastructure spending. Despite worries around supply chains, the direction of travel is clear, CEO Abhijit Dubey said in an interview with the Reuters Global Markets Forum.
“There is absolutely no doubt that in the medium- to long-term, AI is a massive secular trend,” he said. “Over the next 12 months, I think we’re going to have a bit of a normalization … It’ll be a short-lived bubble, and (AI) will come out of it stronger.” With demand for compute still running ahead of supply, “supply chains are almost spoken for” over the next two to three years, he said. Pricing power is already tilting toward chipmakers and hyperscalers, mirroring their stretched valuations in public markets, he added.
Dubey, who is also the firm’s chief AI officer, said his company has begun rethinking recruitment strategies as AI reshapes labor markets. “There will clearly be an impact … Over a five- to 25-year horizon, there will likely be dislocation,” he said. However, he added that NTT DATA continues to hire across locations.”
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This comes amid growing concerns about the “AI Bubble”. A number of tech leaders have recently voiced their opinions about the same.
Amazon founder Jeff Bezos has said that AI may be an “industrial bubble,” but its benefits to society will be “gigantic”. Google CEO Sundar Pichai said in an interview with BBC that the current wave of AI investment was an “extraordinary moment” but acknowledged “elements of irrationality” in the market, echoing warnings of “irrational exuberance” during the dotcom era. He said that no firm was “immune to the AI bubble”.
Anthropic CEO Dario Amodei also weighed in on the issue recently. Amodei declined to give a simple yes-or-no answer to the question of a bubble, saying it was a complex situation, but instead explained his thoughts about the economics of AI in more detail. He described himself as bullish on the potential of the technology, but cautioned that there could be players in the ecosystem who might make a “timing error” or could see “bad things” happen when it comes to the economic payoffs.
The term “bubble” refers to a period of inflated stock prices or valuations of companies that have disconnected from the fundamentals of a business. One of the most famous bubbles that burst was the 2000 dotcom crash where the value of internet companies went down rapidly.