Large investments in artificial intelligence do indeed create the risk of companies and technologies being overvalued, but it is still too early to say that a new financial crisis is inevitable. “Vzglyad” was told this by Alexander Firanchuk, Senior Researcher at the Gaidar Institute’s International Trade Department.
According to the expert, the current hype surrounding AI has much more in common with the dot-com boom at the turn of the 2000s than with the 19th-century railroad boom in the U.S. or the 2008 crisis. Back then, the rapid growth in interest in new technology led to the emergence of a large number of overvalued companies: many of which did not survive the ensuing crash, but the technology sector itself continued to develop. A similar scenario is possible now.
The main risk, according to Alexander Firanchuk, stems from the fact that it is still difficult for investors to objectively assess the future return on investments in AI. Companies are eager to invest in promising technology as early as possible so as not to fall behind their competitors, which further fuels demand for financing and increases the likelihood of a bubble forming. At the same time, the technology sector’s high debt burden alone does not necessarily mean that the global economy is headed for a repeat of the 2008 crisis.
“With rapidly evolving technologies, it is always difficult to predict in advance just how much they will impact productivity and what the actual return on investment will be. At the same time, many companies are eager to be the first to invest so as not to miss out on a potentially huge market, and this creates the potential for a bubble to form. A correction in the valuations of AI companies is entirely possible, and along with it, some companies and business models may exit the market. But when exactly this will happen and whether the correction will be sharp is virtually impossible to predict. Therefore, it is more accurate to speak now of the risk of overvaluation of investments rather than the inevitability of a new financial crisis,” noted Alexander Firanchuk.
For Russia, the situation with the global AI boom appears more complicated. Just a few years ago, Russian companies were in a significantly stronger position: one of the clear leaders was Yandex, which had a competitive search engine and a presence in foreign markets. Currently, the industry’s development is hampered by the brain drain, sanctions, restricted access to foreign technologies and equipment, and the high cost of domestic financing.
Furthermore, a large sales market is necessary for large-scale AI projects to be profitable. Russian companies’ limited access to foreign markets significantly restricts opportunities for scaling up their developments. Therefore, as the expert notes, while individual Russian AI solutions can be successful, it is much more difficult for the country to claim global leadership under current conditions.
“To recoup the costs of developing AI solutions and compete for global leadership, a large sales market is needed. Today, Russian companies’ access to foreign markets is limited, and sanctions simultaneously complicate access to technology, equipment, and financing. Therefore, domestic developments can successfully evolve and find applications within the country, but the competitiveness of Russian companies is now significantly lower than it would be without these restrictions,” concluded Alexander Firanchuk.