As companies pour billions into artificial intelligence, HSBC CEO Georges Elhedery on Tuesday warned of a mismatch between investments and revenues.

Speaking at the Global Financial Leaders’ Investment Summit in Hong Kong, Elhedery said the scale of investment poses a conundrum for companies: while the computing power for AI is essential, current revenue profiles may not justify such massive spending.

Morgan Stanley in July estimated that over the next five years, global data center capacity would grow six times, with data centers and their hardware alone costing $3 trillion by the end of 2028.

McKinsey said in a report in April that by 2030, data centers equipped to handle AI processing loads would require $5.2 trillion in capital expenditure to keep up with compute demand, while the capex for those powering traditional IT applications is forecast at $1.5 trillion.

Elhedery said that consumers were not ready to pay for it, and businesses will be cautious as productivity benefits will not materialize in a year or two.

“These are like five year trends, and therefore the ramp up means that we will start seeing real revenue benefits and real readiness to pay for it, probably later than than the expectations of investors,” he said.

William Ford, chairman and CEO of General Atlantic, speaking at the same panel, agreed: “In the long term, you’re going to create a whole new set of industries and applications, and there will be a productivity payoff, but that’s a 10-, 20-year play.”

Big Tech firms Alphabet, Meta, Microsoft and Amazon have all lifted their guidance for capital expenditures and now collectively expect that number to reach more than $380 billion this year.

OpenAI, which set off the AI frenzy with the launch of ChatGPT in November 2022, has announced roughly $1 trillion worth of infrastructure deals with partners including Nvidia, Oracle and Broadcom.

Ford said that the huge expenditure that is going into the sector shows that people recognize the long-term impact of AI. This sector, however, will be capital-intensive initially, he said adding that “you need to, sort of, pay up front for the opportunity that’s going to come down the road.”

Ford warned there could be “misallocation of capital, destruction, overvaluation… [and] irrational exuberance” in the initial stages, and also added that it can be difficult to pick winners and losers at the moment.

“You’re really betting on this being a broad based technology, more like railroads or electricity, that had profound impacts over over time, and reshaped the economy, but were very hard to predict exactly how in the first few years.”

Whether or not markets are getting ahead of themselves over artificial intelligence is a hot topic for investors right now.

Last week, billionaire investor Ray Dalio said his personal “bubble indicator” was relatively high, while Federal Reserve Chair Jerome Powell described the AI boom as “different” from the dotcom bubble.

For Magnus Grimeland, founder of Singapore-based venture capital firm Antler, it’s clear the market is not overheating. “I definitely don’t think we’re in a bubble,” he told CNBC’s “Beyond the Valley” podcast, listing several reasons.

The speed at which AI is being adopted by businesses is notable compared to other tech shifts, Grimeland said, such as the move from physical servers to cloud computing, which he said took a decade. Added to this, AI is “top of the agenda” for leaders today, he said, whether they’re running a healthcare provider in India or a U.S. Fortune 500 company.

“There’s a willingness to invest into using that technology … and that’s happened immediately,” Grimeland said.

He described the rapid shift to AI as being substantially different from the dotcom bubble of the late 1990s and early 2000s, when unprofitable internet startups eventually collapsed and the tech-heavy Nasdaq lost almost 80% of its value between March 2000 and October 2002.

“What makes this a little bit different from a bubble and makes it very different from dotcom is that there’s really real revenues behind a lot of this growth,” Grimeland said.

OpenAI, the company behind ChatGPT, said it reached $10 billion in annual recurring revenue in June. Annual recurring revenue (ARR) is the amount of money a company expects to make from customers over 12 months.

Antler is an investor in Lovable, a company that enables people to build apps and websites using AI. In July, Lovable said it had passed $100 million ARR in eight months.

Another reason that the rapid adoption of AI is different from the dotcom boom is the speed at which consumers are taking to the technology, Grimeland said. “Think about how quickly our behavior online has changed, right? … 100% of my searches a year ago [were on] Google. Now it’s probably 20%,” he said.

Earlier this month, OpenAI launched its ChatGPT Atlas browser for Mac OS, with shares of Google’s parent company Alphabet falling on the news.

Asked whether there are opportunities for AI startups when large U.S. and Chinese companies currently dominate the sector, Grimeland said the big firms were “being challenged in the way they haven’t for a very long time.” He gave the example of DeepSeek, the Chinese startup that has produced AI models comparable to those from OpenAI.

“Tencent is building great AI, Baidu is building great AI, but that’s not where DeepSeek came from, right?” Grimeland said. “The AI winners of this current platform shift [are] not necessarily those big incumbents.”

As such, there are significant opportunities for smaller AI companies to become big businesses, Grimeland said, flagging firms that have “positive signals,” such as a good founding team, growth in the lifetime value of a customer and a reduction in the cost of delivering a product.

– CNBC’s Dylan Butts, Ashley Capoot, Alex Harring and Jaures Yip contributed to this report.

Palantir CEO Alex Karp took on a familiar target during the company’s earnings call on Monday: His critics.

“Please turn on the conventional television and see how unhappy those that didn’t invest in us are,” Karp said, after the data analytics company reported better-than-expected third-quarter results. “Enjoy, get some popcorn, they’re crying. We are every day making this company better and we’re doing it for this nation, for allied countries.”

Palantir shares are up 25-fold in the past three years, lifting its market cap to over $490 billion and a forward price-to-earnings ratio of almost 280. The stock slipped in extended trading despite the earnings beat and upbeat guidance.

Karp, who co-founded the company in 2003, said Palantir is “going to go very, very deep on our rightness” because it is “exceedingly good for America.”

The eccentric and outspoken CEO has gained a reputation over the years for his colorful — and oftentimes political — commentary in interviews, shareholder letters and on earnings calls. His essay-like quarterly letters have previously quoted famous philosophers, the New Testament and President Richard Nixon.

In Monday’s letter, Karp quoted 20th-century Irish poet William Butler Yeats and argued for a shared “national experience.” He wrote that rejecting a “shared and defined sense of common culture” poses significant drawbacks.

It’s “that pursuit of something greater, and rejection of a vacant and neutered and hollow pluralism, that will help ensure our continued strength and survival,” he wrote.

On the call, Karp pivoted from a discussion of artificial intelligence adoption to fentanyl overdoses in America, a topic he described as “slightly political.”

“I want people to remember if fentanyl was killing 60,000 Yale grads instead of 60,000 working class people, we would be dropping a nuclear bomb on whoever was sending it from South America,” he said.

Karp also commented on the company’s deals with U.S. Immigration and Customs Enforcement and the Israeli military. Earlier this year, Palantir won a $30 million deal to build ImmigrationOS for ICE, providing data on the identification and deportation of immigrants.

In 2023, Karp had a message for people in the tech industry who have misgivings about his company’s dealings with intelligence agencies and the military.

“You may not agree with that and, bless you, don’t work here,” Karp said at the World Economic Forum in Davos, Switzerland.

Palantir, which gets more than half its U.S. revenue from the government, also provided tools to Israel after the deadly Oct. 7 attack by militant group Hamas. In recent years, both Karp and the company have undertaken a fiercely pro-Israel stance.

Following the Oct. 7 attack, Palantir took out a full-page ad in The New York Times, saying it “stands with Israel” and held its first board meeting in Tel Aviv, Israel, a few months later. Karp has said the company has lost employees due to his staunch Israel stance, and he expects more to leave.

“We’re on the front line of all adversaries, including vis-à-vis China, we’re on ICE and we’ve supported Israel,” he said on the earnings call. “I don’t know why this is all controversial, but many people find that controversial.”

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