Artificial intelligence has propelled companies like Nvidia to the forefront of one of the biggest technology booms in history. Chipmakers, large language model (LLM) developers and data centre companies have attracted trillions of dollars in investor capital, becoming the face of the AI revolution. But according to renowned valuation expert Aswath Damodaran, investors chasing today’s winners may be missing the bigger opportunity.
In an interview with CNBC-TV18, the NYU Stern School of Business professor argued that while and other AI infrastructure companies are clear beneficiaries of the current spending cycle, history suggests they may not become the biggest long-term winners. Instead, he believes the companies that ultimately create the most value from may not even exist in investors’ portfolios today—and in some cases, may not even be public yet.
also cautioned that the most optimistic projections for AI could have profound consequences beyond markets. The very scenarios that justify trillion-dollar valuations could also imply unprecedented disruption to white-collar employment.
Will Nvidia remain the biggest AI winner?
Damodaran believes the market has become heavily focused on AI infrastructure, where the benefits are already visible.
Chipmakers such as Nvidia, companies supplying data centres and businesses building the computing backbone for AI are seeing immediate demand because spending on infrastructure is happening now, not years into the future.
However, he said investors are overstating AI’s role in driving equity markets.
“One of the most interesting phenomena is in the last two months. The AI trade has actually turned sour for the most part. You look at Nvidia, you look at the Mag 7 and the most amazing thing is markets have held their own. That tells you that markets are… there’s a much bigger breadth to markets. The AI trade is helping markets, but the degree to which it’s carrying markets has been overstated.”
According to Damodaran, the companies attracting the most attention today have already been “discovered” by investors.
“I think almost all the big stories are still in the architecture. I mean I think of AI the architecture as building a big factory right that factory needs chips it needs data centers there all these companies that feed off it they’ve been discovered already… the products and services that come out of this factory are what will keep the factory going.”
He said the world has already spent trillions of dollars constructing AI’s infrastructure without knowing which businesses will ultimately generate enough profits to justify those investments.
That is why he believes the biggest opportunity lies elsewhere—not in the companies building the factory, but in those that eventually use it.
Drawing parallels with the internet boom, Damodaran said investors often assume infrastructure providers will dominate forever. History suggests otherwise.
“There will be a winner in this space. I don’t know what that winner looks like right now. It might not even be public, but the winner will be a company that delivers products and services rather than the architecture company. Look back at previous booms. It wasn’t Cisco… it was . With AI, you’re going to get the same phenomenon.”
For investors, he said, that is perhaps the biggest lesson from previous technology revolutions. While Nvidia and other infrastructure leaders may continue to perform well, the companies that eventually define the AI era could be businesses that are still unknown today.
Could AI’s biggest opportunity become society’s biggest risk?
Damodaran believes there is little doubt that AI will transform industries, but he questioned whether the most bullish projections are actually desirable.
If AI becomes as large as some forecasts suggest, he argued, the implications for employment would be enormous.
“For the AI market to be worth the 26 trillion, for instance, that you saw in the prospectors, I would estimate that one out of every two white collar workers would have to lose their jobs. Lawyers, consultants, bankers, journalists… where do they go? What are they going to do?”
He said such a scenario would leave the broader economy facing difficult questions.
If millions of professionals lose their incomes, consumer spending would inevitably weaken, raising doubts about who would eventually buy the products and services that AI companies are creating. In his view, the most optimistic AI forecasts are therefore also the most worrying for society.
Damodaran does not expect either extreme to materialise. He believes AI will neither eliminate half of all white-collar jobs nor prove to be another overhyped technology fad. Instead, he expects the outcome to fall somewhere in between, with AI improving productivity while replacing certain categories of work.
For investors, however, his message is clear. Today’s AI rally has created enormous wealth for companies like Nvidia, but history suggests that the businesses generating the greatest long-term value from a technological revolution are rarely obvious in its early stages. Just as Amazon—not Cisco—emerged as one of the defining winners of the internet era, Damodaran believes the biggest beneficiaries of AI may still be waiting to emerge.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.