NTT DATA’s CEO Abhijit Dubey predicts a short-lived AI bubble, suggesting that while the market may normalize, the long-term outlook for artificial intelligence remains strong as corporate adoption grows.
The head of Japanese IT firm NTT DATA, Abhijit Dubey, has expressed his belief that the current artificial intelligence (AI) bubble will deflate more quickly than previous technology cycles. However, he anticipates that this will lead to a stronger rebound as corporate adoption aligns with increased infrastructure spending.
In an interview with the Reuters Global Markets Forum, Dubey stated, “There is absolutely no doubt that in the medium- to long-term, AI is a massive secular trend.” He elaborated that he expects a normalization in the market over the next 12 months, predicting, “It’ll be a short-lived bubble, and (AI) will come out of it stronger.”
Dubey highlighted that demand for computing resources continues to outpace supply, noting that “supply chains are almost spoken for” for the next two to three years. He pointed out that pricing power is shifting toward chipmakers and hyperscalers, reflecting their elevated valuations in public markets.
As the landscape of labor markets evolves due to AI advancements, Dubey, who also serves as NTT DATA’s chief AI officer, indicated that the company is reevaluating its recruitment strategies. He acknowledged the potential for significant disruption, stating, “There will clearly be an impact … Over a five- to 25-year horizon, there will likely be dislocation.” Despite these challenges, he affirmed that NTT DATA continues to hire across various locations.
Concerns regarding the so-called “AI bubble” have been echoed by several tech leaders in recent months. Amazon founder Jeff Bezos has characterized AI as potentially creating an “industrial bubble,” but he also emphasized that its societal benefits will be “gigantic.”
Google CEO Sundar Pichai described the current wave of AI investment as an “extraordinary moment” but acknowledged the presence of “elements of irrationality” in the market, drawing parallels to the “irrational exuberance” seen during the dotcom era. He cautioned that no company is “immune to the AI bubble.”
Dario Amodei, CEO of Anthropic, also weighed in on the topic, refraining from a simple yes-or-no answer regarding the existence of a bubble. He elaborated on the complexities of AI economics, expressing optimism about the technology’s potential while warning that some players in the ecosystem might make “timing errors” or face adverse outcomes regarding economic returns.
The term “bubble” typically refers to a period characterized by inflated stock prices or company valuations that are disconnected from underlying business fundamentals. One of the most notable examples of such a bubble was the dotcom crash of 2000, during which the value of internet companies plummeted rapidly.
As discussions around the AI bubble continue, industry leaders remain divided on the implications for the future of technology and its integration into various sectors. The consensus, however, is that while the current market may experience fluctuations, the long-term trajectory for AI appears promising.
According to Reuters, the evolving landscape of AI presents both challenges and opportunities for businesses as they navigate this transformative technology.