The AI bubble is going to burst, but the rebound will be strong, NTT DATA CEO says

Abhijit Dubey, CEO of Japanese IT services giant NTT DATA Inc. and the firm's Chief AI Officer, has predicted that the current investment fervor surrounding Artificial Intelligence will likely deflate into a short-lived "bubble," but that this correction will be followed by a significant and robust rebound.

Dubey stated that while the current market shows signs of overheating, the underlying technological trajectory of AI is an undeniable, massive secular trend.

A swift, short-lived correction

Speaking in a recent interview, Dubey acknowledged the similarities between the current AI investment frenzy and past tech cycles, including the dot-com era, where valuations outpaced real-world corporate implementation. However, he argued that the AI bust will be quicker and less severe than previous crashes.

"There is absolutely no doubt that in the medium- to long-term, AI is a massive secular trend," Dubey 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."

This prediction contrasts slightly with the view of Google CEO Sundar Pichai, who recently warned of "irrationality" but did not offer a timeline for a potential rebound.

The core driver: Infrastructure vs adoption

Dubey explained that the imbalance causing the "bubble" is the current disconnect between massive infrastructure spending (on GPUs, data centers, and supercomputing) and the actual corporate adoption of sophisticated AI models.

Infrastructure lead

Demand for computing power still dramatically outstrips supply, with chip supply chains already "spoken for" over the next two to three years. This concentration of pricing power in the hands of chipmakers and hyperscalers (like Nvidia and major cloud providers) reflects their currently stretched valuations.

Adoption lag

The next phase will see enterprises, from finance to manufacturing, accelerate the integration of these models into their core business processes, driving true, value-driven growth that will justify the initial investment. This mass adoption will power the stronger rebound.

Impact on jobs and strategy

Dubey also addressed the long-term impact on the labor market, admitting that AI will "clearly have an impact" and predicting a potential labor dislocation over a five- to 25-year horizon. This outlook is forcing companies like NTT DATA to rethink recruitment strategies to focus on upskilling employees to work alongside AI tools.

The CEO's comments echo a key consensus in the tech world: while the long-term value of AI is guaranteed, the market is currently working through a period of intense speculative investment that will need to align with actual, deployed business value.