Youssef Humaidan, Managing Partner at VentureX, said that the current debate surrounding AI companies revolves around the gap between optimistic investment vision and these companies' ability to achieve the necessary returns to justify massive infrastructure spending.

He added in an interview with Al Arabiya Business that Oracle is no longer just a software company, but has become a major player in providing the infrastructure and computing power needed to run AI applications, noting that a large part of its contracts are linked to OpenAI.

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He explained that the main challenge is not about the technology itself, but about the ability of beneficiary companies to convert this spending into sustainable revenue, noting that continued expansion of investments requires business models capable of generating sufficient returns to cover increasing financial commitments.

He confirmed that cash flows are under clear pressure due to massive investments in data centers and infrastructure, indicating that any slowdown in achieving expected revenues could place some companies in front of major financial challenges.

He pointed out that the emergence of new low-cost AI models, especially from China, poses additional challenges for companies that have poured billions of dollars into building computing capabilities, as any significant drop in the cost of developing and operating models could reduce the expected returns from these investments.

He warned that the high degree of concentration in the sector is a source of concern, both in terms of the number of major beneficiary companies and the technology developers, which has pushed credit markets to increasingly focus on these companies' ability to meet their financial obligations and deliver promised returns.

He added that markets are beginning to raise questions similar to those during the fiber optic boom in the 1990s, when heavy spending on infrastructure led to debt accumulation before the actual limits of demand and returns became apparent.

Regarding the competition between the United States and China in AI, the expert affirmed that Beijing is adopting a clear strategy based on building an independent technological ecosystem and reducing reliance on American technologies, while simultaneously accelerating the development of its own capabilities.

He explained that what is happening now is no longer just commercial competition between technology companies, but has turned into a strategic race with economic and security dimensions, noting that both countries seek to protect their technological ecosystem and enhance their global influence through AI.

He added that the United States is working to protect its technological superiority, while China seeks to expand its technological presence globally, making AI one of the most prominent strategic competition files in the coming years.

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