Chief Economic Advisor (CEA) Dr V Anantha Nageswaran has labeled the current valuations of artificial intelligence (AI)-related companies as a "bubble," while suggesting that concerns over AI-induced job losses may be overstated amid intense investor enthusiasm.
AI Stock Valuations Are a Bubble
In an exclusive interview with ANI, Nageswaran stated unequivocally, "The stock market, AI-related stocks and AI-related valuations are definitely a bubble. There is no question about it." He argued that much of the current narrative around AI is being driven by companies seeking to attract capital and convince investors of the technology's transformative potential.
Hype Driven by Capital-Seeking Companies
"There is so much of hype because they want to tell the capital contributors, the investors, 'oh my God, this is going to be such a productivity bonanza'," Nageswaran explained. According to him, some companies are portraying AI as a tool that could drastically reduce labor costs and boost profits, thereby creating anxiety among workers and new graduates.
"They want to tell the capital owners, you will be rewarded in the process. They have induced a fear in the minds of labour," he added.
Serious Assessment After the Bubble Bursts
Nageswaran cautioned that meaningful evaluations of AI's impact on employment can only occur once the current wave of market excitement subsides. "A serious conversation about AI's contribution or its threat to the labour market... can happen only after the current bubble is behind us," he said.
While acknowledging that AI will affect certain professions and skills, particularly in the technology sector, he noted that its long-term effect on employment remains uncertain. "It will have an impact on some IT skills, which will not be required anymore, as was the case with all technologies. But whether it will be a massive disruptor in terms of employment, I think that the jury is still out," he remarked.
Far Too Much Fear, Far Little Information
The CEA emphasized that there is currently "far too much fear and far little information about the AI threat." He acknowledged that people are indeed losing jobs but cautioned against overgeneralization. "It is true it's a lived experience. People are losing their jobs. I don't want to either trivialize it or say it's all hype and labour will not be impacted," he said. "All I'm saying is right now, there is far too much fear and far little information about the AI threat."
Slower Adoption Than Assumed
Nageswaran also suggested that the pace of AI adoption may be slower than widely assumed, as the cost of AI services could limit how quickly they spread across industries. "The pricing with which AI services are priced may determine how fast it will diffuse. It may give you more time," he said.
He concluded that the real opportunities and risks associated with AI would become clearer once the current market frenzy eases. "Only when the bubble bursts, we may be able to have a better sense of where the opportunities and the threats lie," he added.
