'Where is the use case?': Ex-HCL CEO questions AI's trillion-dollar valuations amid hype

AI companies are chasing trillion-dollar valuations, but the technology has yet to produce revenue-generating use cases that transformed the internet, former HCL CEO Vineet Nayar said on Monday.

Nayar questioned whether the warnings were also linked to the industry's race for massive valuations, arguing that AI companies had yet to demonstrate the revenue-generating use cases that earlier technology revolutions produced.

The former tech CEO's comments came days after top AI executives, including Anthropic CEO Dario Amodei, urged other industry leaders to slow down AI development because of the risks involved.

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"These guys have to prevent their trillion-dollar valuations. Although I'm a big fan of AI, it is running ahead of its delivery. So the hype cycle is going up because of which, they are selling us a story that it is going to deliver something, which it has not delivered, but it'll deliver tomorrow," he said in an interview with India Today's Rajdeep Sardesai.

"And now suddenly they are saying: hey, we are going to slow down, and that is the reason we will not be able to deliver to the trillion-dollar valuation. So, I don't buy into that argument. I buy into the argument that AI is one of the most exciting technologies, which is going to happen. But I don't buy into the argument that AI is going to lead the humans or AI is going to kill the humans," he added. 

Nayar suggested that he doesn't see any use case to justify such valuations. "See the fact that a lot of these companies want to list, and they want to list at a trillion- dollar valuation, and the question I ask is where is the use case?" he said.

The former CEO compared the current AI boom with the early years of the internet. He said companies such as Amazon, Facebook, and Google eventually created major use cases that turned technology into revenue-generating businesses.

"When the internet came in, it took seven years for Amazon, Facebook, and Google to come in, and those were mega use cases which transformed the use of technology into revenue-bearing activity," he said. "Where is that revenue-bearing activity which AI has driven?"

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Nayar, who served as HCL Technologies CEO from October 2007 to January 2013, said AI would eventually transform industries and education, but argued that the promised economic payoff had not yet arrived.

"It will definitely drive. It will transform industries. It will transform education. But where is the use case right now?" he said.

That gap, he argued, was important because the industry's narrative had continued to expand even as the underlying business case remained unclear.

"Initially, you said AI is going to be brighter than humans. Then you said it is going to have more IQ than humans. Then you said that it'll take over all the jobs. And now you're saying it is going to kill," Nayar said, while referring to the American tech bosses driving the AI innovations.

"So, basically, you want to center all the arguments...that AI is about to come, but the fact is, where is that use case?" he asked.

The tech veteran said AI's eventual impact should not be confused with its present state. "After electricity, there was a use case. After the internet, there was a use case. So it will come, but it is not coming right now, and it is not coming tomorrow," he said.

The business leader also said that the absence of a clear use case also raised questions about whether today's valuations could be sustained.

"There are lots of young people who are developing LLMs at half the cost at 10 times faster," Nayar said. "And, therefore, when you bring in this kind of 'sher aaya' concept, that kind of innovation really dies down. So I would take that with a pinch of salt."