The rapid growth of artificial intelligence has led some observers to warn of a “bubble” destined to burst, but technology leaders say there is good reason to believe the sector will not suffer the same fate as the dot-com crash of the early 2000s.
“There are key differences between the application of artificial intelligence infrastructure, which is still being built, and the Internet boom of the late 1990s,” said Nvidia senior vice president of networking Kevin Deyerling. At that time, everything had to be created from scratch, and companies were not ready to use this technology right away.
“There has been a lag,” Deierling said, speaking in Toronto on Wednesday along with other technology executives on the sidelines of the Cisco Connect conference.
“Suddenly I had all this bandwidth for the Internet and the dot-com era, but now I really need Amazon, Uber, Netflix and all these other businesses.”
While these use cases have evolved over time, Deyerling said AI won't have to wait decades. He said applications for software built on artificial intelligence technology “already exist” and companies could take advantage of them immediately.
“In the dot-com era, towards the late 1990s, early 2000s, you started to see inventory piling up… and people shipping items that weren't really selling. We don't see that at all,” he said in an interview.
“This thing gets used as soon as it’s built.”
The upbeat forecast came just hours before the company reported its latest quarterly earnings, potentially easing recent concerns among some analysts. The company reported net income of $31.9 billion for the third quarter, up from $19.3 billion a year ago, and revenue rose 62 percent.
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Nvidia's sales of computer chipsets known as graphics processing units, which are used to train powerful artificial intelligence systems such as ChatGPT technology and image generators, exceeded analysts' expectations.
Nvidia, Wall Street's biggest stock briefly worth more than $5 trillion, has struggled this month, losing more than 10 percent on the S&P 500 as of Tuesday. The company's share price rose more than two percent on Wednesday.
Analysts are keeping a close eye on the stock for potential signs of how the artificial intelligence sector could continue to perform as other companies rely on Nvidia chips to ramp up their own artificial intelligence efforts.
While artificial intelligence stocks have been rising for years, there are growing concerns that excessive levels of spending in the industry may not translate into as big profits as expected.
Other sector leaders also played down those concerns at Wednesday's conference. Francois Chadwick, chief financial officer of Toronto technology company Cohere, likened demand for AI to a “constant drumbeat.”
“There is a real need,” Chadwick said in an interview, adding that in the early days of the Internet, some tech companies were “creating things that no one really even wants or needs.”
“Now there is a demand, there is a need. Companies, businesses, governments – everyone is asking for it.”
A study released last month found that only eight per cent of Canadian organizations are classified as “AI ready.” According to CiscoAI's Readiness Index, nearly three-quarters of those surveyed in Canada plan to deploy AI agents and 34 percent expect them to work alongside employees within a year, but few have the secure infrastructure to support it.
Those who are fully prepared are 50 percent more likely to see measurable value.
Deyerling described Canada as “leading in research and lagging in deployment” when it comes to using AI.
“And I don’t understand why,” he said.
“I mean, you have the underlying potential, people who understand it. You have all kinds of businesses that need to benefit from it, and so I think it's just a matter of will.”
But Deierling acknowledged that many companies remain wary of AI. The key, he says, is to start small, often focusing on internal use cases, rather than “risking your entire business on some AI that you may not understand how to implement.”
“Every company is ready to use AI, they just don’t know it,” he said.
“The risk isn't that high. Deploy something and start using it, and you'll find that the performance gains are so great that demand will just completely drive the next generation.”
— With files from The Associated Press.
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