AI is the future, but most AI startups won't survive: Former Cisco CEO
John Chambers says artificial intelligence is transforming industries at unprecedented speed, but investors should prepare for a sharp shakeout as market leaders face mounting pressure from rivals, open-source models and rapidly evolving technology.
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The artificial intelligence boom is not a bubble, but investors should expect many startups to fail as competition intensifies and market leadership changes rapidly, former Cisco CEO John Chambers said.
Speaking exclusively to CNBC-TV18, Chambers said the current AI wave is creating unprecedented opportunities but warned that only a handful of companies will emerge as long-term winners.
According to Chambers, investors should be cautious about betting on individual companies because the pace of disruption in the AI industry is far faster than anything seen during the internet era.
He said companies can quickly rise to prominence and just as quickly lose their competitive advantage as new entrants, open-source models and technological breakthroughs reshape the market.
“Out of the magnificent, let's say 10 today, that are trillion-dollar companies, a fair amount of those companies will not be in that mode at all three to five years from now,” he said.
Chambers pointed to the rapid shifts in leadership among AI companies over the past few years. He noted that OpenAI initially established a strong lead through ChatGPT, while competitors soon caught up and challenged its position.
“What was the best capability just two and a half years ago? OpenAI and basically what ChatGPT did. Then Google was in trouble. Two years later, Gemini was in the lead. A year later, Claude emerged,” he said.
The former Cisco chief said such rapid changes make portfolio diversification increasingly important for investors seeking exposure to artificial intelligence.
“It used to be, when we'd look at this, that if you picked a company, you would have a period of time during which you could ride out the differentiation,” Chambers said. “Right now, I think you really have to do a portfolio play.”
Watch the full conversation here
He added that the competitive cycle in AI is significantly shorter than during the internet boom, with companies capable of moving into or out of leadership positions within a matter of years.
Chambers said investors can still generate strong returns from the broader AI ecosystem, but success will depend on identifying businesses that can maintain an edge in a market where innovation is accelerating at an unprecedented pace.
Speaking exclusively to CNBC-TV18, Chambers said the current AI wave is creating unprecedented opportunities but warned that only a handful of companies will emerge as long-term winners.
“This AI issue is not a bubble at all, it is the future,” Chambers said. “However, the majority of AI startups will fail.”
According to Chambers, investors should be cautious about betting on individual companies because the pace of disruption in the AI industry is far faster than anything seen during the internet era.
He said companies can quickly rise to prominence and just as quickly lose their competitive advantage as new entrants, open-source models and technological breakthroughs reshape the market.
“Out of the magnificent, let's say 10 today, that are trillion-dollar companies, a fair amount of those companies will not be in that mode at all three to five years from now,” he said.
Chambers pointed to the rapid shifts in leadership among AI companies over the past few years. He noted that OpenAI initially established a strong lead through ChatGPT, while competitors soon caught up and challenged its position.
“What was the best capability just two and a half years ago? OpenAI and basically what ChatGPT did. Then Google was in trouble. Two years later, Gemini was in the lead. A year later, Claude emerged,” he said.
The former Cisco chief said such rapid changes make portfolio diversification increasingly important for investors seeking exposure to artificial intelligence.
“It used to be, when we'd look at this, that if you picked a company, you would have a period of time during which you could ride out the differentiation,” Chambers said. “Right now, I think you really have to do a portfolio play.”
Watch the full conversation here
He added that the competitive cycle in AI is significantly shorter than during the internet boom, with companies capable of moving into or out of leadership positions within a matter of years.
Chambers said investors can still generate strong returns from the broader AI ecosystem, but success will depend on identifying businesses that can maintain an edge in a market where innovation is accelerating at an unprecedented pace.
(Edited by : Prashant)
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