With the wave of AI innovation sweeps across industries, it brings to mind the transformative impact of the internet in the 90s.
The lessons from this boom, in fact, may be invaluable as we navigate this new frontier.
The internet fundamentally altered landscapes by introducing new tools, increasing transparency, and revolutionizing experiences. These changes provided enterprises with unprecedented opportunities.
By the turn of 1999, Microsoft was at the very top, with Intel, IBM and Cisco also ranking among the leaders in the industry. Sun Microsystems, the epitome of the “dot in dotcom,” saw its stock price skyrocket from $25 to $310 between January 1997 and December 1999, reaching a peak market capitalization of approximately $200 billion.
Fast forward to the present day. In April 2023, Nvidia’s PE ratio of 143 seemed expensive, but hindsight reveals it was a bargain. The stock price has since doubled.
What are some of the parallels that can be drawn between the internet era and AI?
According to Sumedh Nadendla, Investment Lead at Pacific Alliance Ventures, “While the future of AI is still uncharted waters, we are starting to see clear parallels with the previous internet revolution and rise of software service apps. Here, it’s important to remember that it was infrastructure pioneers who paved the way for consumer-driven services and transformative industry solutions that later took shape.”
Wrote the the venture capitalist, “In the early era of the internet, the dominant telcos of the time had to invest heavily in building the physical backbone required for widespread internet adoption, much like the hyperscalers of today. Without these investments, the internet would have struggled to get off the ground.”
“Over time, these foundations paved the way for software infrastructure companies Cisco, Sun Microsystems and Oracle to become pivotal internet enablers as system design and protocols began to standardize. We can see a highly similar pattern shaping up today when we examine the progress of AI adoption,” added the investor.
The investor concluded by highlighting 3 three themes of AI-enablers to watch that have the ability to support enterprise developers with the foundation and framework to build durable, reliable AI-native applications, including A) Durable cloud workflows: Enable reliable, reproducible results, B) Resource management tools key to efficient deployment, and C) Leverage DevOps for agile AI solutions.
Artificial intelligence appears to be a disruptive innovation that is supporting existing incumbents. These heavyweights have the resources and data to integrate AI capabilities into their existing solutions, further strengthening their position.
However, it’s important to note that the AI landscape is still in its early stages, and the long-term impact remains to be seen.
For instance, it is worth noting some of the largest winners of the internet era such as Netflix and Salesforce were not as omnipresent from the start.
