AI frenzy spooks investors but JPMorgan CEO Jamie Dimon says spending boom likely to pay off. Here's why

Artificial intelligence has sent shockwaves across global markets this year, but JPMorgan Chase CEO Jamie Dimon believes that the billions poured into AI infrastructure will ultimately "play out and pay out".

The chief executive of one of Wall Street's top banks during an interview with CNBC highlighted that AI demand is going up dramatically, so the massive spending by the hyperscalers will likely bear fruit in the future.

"In my own view, and I may be wrong, it will ultimately play out and pay out. These people (hyperscalers) are doing real calculations, which is needed. They see what it costs to do the frontier models. They see what it costs to do inferencing," Dimon said.


However, he noted that the case is different for specific data centres. "Who's the takeout? When's the takeout? Who's responsible if the power doesn't get turned on? Who's responsible if the GPUs don’t work at full function? That's projects. And that one, you have to analyse one by one. But we will see," he said during his latest interview with CNBC.

According to Jamie Dimon, this is also driving the American economy, contributing to a rise in GDP. As a result, he felt that hiring people was necessary to procure the steel, cement and all other things needed to build data centres.

Also read | What bubble? Amazon enters $3 trillion market cap club, CEO highlights striking AI demand


What if the AI boom fizzles out?

While artificial intelligence has brought in a new wave of technological innovations, it has also brought in concerns around the excessive optimism surrounding it, with analysts even doubting if it is just a bubble ready to be popped and wreak havoc on the financial market. On being asked what will happen if this AI boom indeed fizzles out, Dimon said he is not too concerned about the reversal, and it is not high on the list of things investors should worry about.

Notably, Dimon’s latest statement comes after the JPMorgan CEO earlier this year warned of an impending market collapse and likened the current situation to the pre-2008 crash era. He sees some people doing “dumb things” to make money during this volatile and risky scenario.

The veteran banker said people are doing dumb things to make money in turbulent markets to claim they are "winning in the markets business". Without mentioning names, he was referring to financial institutions making risky bets to earn good profits, while stock markets are reacting to developments like tariffs and artificial intelligence.

"My anxiety is high over it," he said while speaking at an event in February, as quoted by CNN. He added that there will be a cycle one day, although he is not sure what confluence of events can lead to that cycle. He added that he is not assuaged by the fact that asset prices are high, saying that this actually adds to the risk.

Dimon also commented on the ongoing frenzy around artificial intelligence. He explained industries like newspapers, utilities and phone companies seemed stable until the issues during the 2008 collapse. "This time around, it might be software because of AI... There are moving tectonic plates underneath it, which causes the industry to be challenged," he said.

Also read | JPMorgan CEO Jamie Dimon warns AI and 'dumb things' can trigger a 2008-like crisis


(With inputs from agencies)
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