We're in an AI 'super cycle,' top investor says — and it could last 20 years

Raj Ganguly, co-founder of B Capital, posits that artificial intelligence is in the early stages of a 15-20 year "super cycle" that will profoundly transform global industries, shifting focus from consumer tech to "deep tech" such as generative AI and advanced semiconductors. He highlights the resurgence of Silicon Valley and the emergence of AI-native app development, particularly in markets like India, which he expects to produce future market leaders. While acknowledging some current market "frothiness" surrounding AI, Ganguly underscores the long-term, fundamental impact of this technology across various sectors.

Analysis

According to B Capital's Raj Ganguly, the artificial intelligence sector is in the early phase of a 15-to-20-year 'super cycle' poised to fundamentally reshape global industries. This cycle represents a significant pivot from the prior decade's focus on consumer-facing tech, exemplified by companies like Amazon and Meta, toward 'deep tech' such as generative AI and advanced semiconductors. This shift is expected to impact sectors previously less penetrated by technology, including healthcare and drug development. While Silicon Valley is experiencing a resurgence, its global market share has fallen below 50%, ceding ground to innovation hubs in Asia. Specifically, India is highlighted as a burgeoning center for 'AI native apps,' which are projected to become market leaders in the U.S. and Europe within five years, representing a key future profit pool. Despite this long-term bullish outlook, Ganguly cautions that the market is currently 'frothy' and in a 'bit of a bubble,' as investor expectations for transformative change within the next five years are likely premature, underestimating the longer timeline required for full-scale adoption and impact.

Key Decisions for Investors

• Investors should adopt a long-term investment horizon for the AI sector, but remain cautious of near-term volatility and 'frothy' valuations driven by overly optimistic short-term expectations.
• Consider re-evaluating portfolio allocations, potentially shifting focus from mature consumer-facing technology companies towards firms specializing in foundational 'deep tech,' such as advanced semiconductors and AI-native application layers in sectors like healthcare and climate.
• It may be prudent to increase exposure to emerging markets, with a specific focus on identifying potential market leaders within India's developing AI-native application ecosystem.