But despite massive expectations, measurable productivity gains from AI remain elusive. Only a fraction of projects deliver measurable results, and promised boosts to efficiency and income have yet to materialize. Optimism seems to have outpaced evidence.
The current AI-driven market mania bears an uncanny resemblance to the late-1990s dotcom bubble. Then, as now, investors poured money into firms whose valuations soared far beyond their profits. Today’s AI champions trade at price-to-earnings multiples reminiscent of that period, while smaller firms with tenuous business models, such as quantum computing startups or miniature nuclear-reactor ventures, command startling valuations. Retail investors have also joined the party, drawn by the same speculative energy that once inflated the shares of internet darlings.
There are, however, differences that make this boom more complex — and potentially more perilous. The scale of investment is staggering. Whereas the dotcom bubble saw perhaps half a trillion dollars poured into infrastructure, global data center investments are already nearing that figure, with forecasts of an additional five trillion dollars over the next five years. The AI frenzy is no longer confined to Silicon Valley; it has become a planetary phenomenon, stretching from Tokyo to Toronto.
The backbone of this rapid AI expansion — vast networks of data centers — is also its Achilles’ heel. Facilities that once consumed 100 megawatts now demand gigawatt-scale power, creating unprecedented pressure on energy infrastructure. Meeting this appetite will require expanding global electricity generation by as much as 30% within a decade. Companies are already scouting remote regions for off-grid energy sources, including solar arrays and even private nuclear reactors.
Yet this scramble raises critical questions about sustainability, cost, and technological obsolescence. Rapid advances in chip design could render today’s multibillion-dollar facilities outdated before their debts are paid — a risk that leaves power utilities hesitant to commit to long-term supply contracts. Adding to the fragility is a resurgence of risky financing practices. Some firms are extending credit to their own customers or suppliers to maintain momentum, echoing the vendor-financing excesses that deepened the dotcom collapse.
A sharp correction in AI valuations would ripple far beyond the technology sector. A year ago, the fallout might have been contained within a few cash-rich tech giants. But the ecosystem has since expanded to include smaller cloud providers, data-center real estate trusts, and heavily leveraged newcomers with weak credit profiles. Lending markets, pension funds, and government-backed agencies are now deeply entwined with AI’s capital flows.
Should confidence falter, the shock would not be limited to a few firms in California or Osaka — it could reverberate through the financial system, potentially precipitating a broader downturn and exposing vulnerabilities across global markets.
Speculation is easy to spot; transformation is harder. Valuation multiples and volatility indices can reveal bubble-like conditions, but genuine innovation becomes apparent only over time. The hallmarks of true technological revolutions — electrification, mechanized transport, modern medicine — were steady and widespread improvements in productivity, living standards, and equality. By these measures, AI’s impact remains modest, despite its extraordinary promise.
For now, the sector straddles two futures: one of enduring progress and one of exuberant excess. Whether AI becomes the next electricity, or the next dotcom era phenomenon depends not on market valuations, but on whether its promise translates into tangible productivity gains for workers, firms, and societies at large.
Artificial Intelligence has captured global attention — and capital — fuelling a surge in markets from Wall Street to the Tokyo Stock Exchange. The Nikkei 225, like many indices, has risen on a tide of optimism. While signs of a speculative AI bubble remain clear, it is uncertain when, or how sharply, such a bubble will burst. Yet just as the technologies that survived the dotcom collapse reshaped our lives, AI too holds transformative potential. Whether the eventual market correction hampers that transformation remains a key question for policymakers, investors, and businesses worldwide.
To find out more about how IGPI Group can provide support for businesses, browse through our insight articles or get in contact with us.
Kohki Sakata, Partner of IGPI Group & CEO of IGPI Singapore
After joining Cap Gemini and Coca Cola, Kohki joined Revamp Corporation where he managed projects on global expansion and turnaround in various sectors including F&B, healthcare, retail, IT, etc. After joining IGPI, he has managed projects mainly on global expansion and cross border M&A in various sectors such as logistics, IT, telecom, retail, etc. In addition to his broad experience in implementing solutions that has been developed in Western countries, he has developed multiple methods to turnaround Asian companies with focus on setting clear vision and employee empowerment. Kohki has proven the practicality of these methods by turning around Asian companies not only as an advisor but also as senior management.
He graduated from Waseda University Department of Political Science and Economics and IE Business School.
Shivaji Das, Managing Director of IGPI Singapore
Shivaji has over 20 years of strategy consulting experience, specializing in New Business Models, Innovation Roadmaps, and Sustainability Journeys. He has worked with private and public sector clients across 25 countries in sectors like Technology, Semiconductors, Chemicals, Healthcare, Renewable Energy, and Construction. Previously, Shivaji was a Partner and Managing Director-APAC at Frost & Sullivan. His paper on Artificial Intelligence was presented at CAINE-2000 in Hawaii, USA. He is the author of seven acclaimed travel, art and business books including The Visible Invisibles and Rebels, Traitors, Peacemakers (both Penguin Random House), as well as The Great Lockdown: lessons learned during the pandemic from organizations around the world (Wiley, USA).
He is an alumnus of IIT Delhi and IIM Calcutta.
IGPI Group is a Japan rooted premium management consulting & Investment Group headquartered in Tokyo with a footprint in Osaka, Singapore, Hanoi, Shanghai & Melbourne, as well as parts of Europe and India. The organization was established in 2007 by former members of the Industrial Revitalization Corporation of Japan (IRCJ), a USD 100 billion sovereign wealth fund focusing on turn-around projects in Japan. IGPI Group has 13 institutional investors, including Nomura Holdings, SMBC, KDDI, Recruit & Sumitomo Corporation to name a few. IGPI Group has vast experience in supporting Fortune 500s, Govt. agencies, Universities, SMEs and funded startups across Asia and beyond for their strategic business needs and hands-on support across a wide variety of industries. IGPI group has ~8,500 employees on a consolidated basis.
* This material is intended merely for reference purposes based on our experience and is not intended to be comprehensive and does not constitute as advice. Information contained in this material has been obtained from sources believed to be reliable, but IGPI does not represent or warrant the quality, completeness, and accuracy of such information. All rights reserved by IGPI.
Copyright© 2025 Industrial Growth Platform Pte. Ltd. All rights reserved. Web Excellence by Verz
