We have some wonderful speakers here with us today. To kick things off is somebody that has been an old India friend, John Chambers. Thank you so much for being here. He needs no introduction but has seen many market transitions as the man who steered Cisco from a billion dollars to $50 billion with 180 plus acquisitions, and has been a big believer in the India story. He did the first GCC before it was even called that in Bengaluru. Thank you John for being a big supporter of India and of young Turks. We truly appreciate your time and friendship. Ladies and gentlemen, a big round of applause for John Chambers. May I request you to join me onstage. What's happened as far as SpaceX is concerned? Is this a tectonic shift, especially for the public markets? Are they pricing in risk differently? A $2 trillion market cap company at the end of day one for SpaceX. John, what do you make of it?
I think it is great and I mean that way beyond just the transaction. The speed of innovation has never been faster, and with that innovation, the areas that cover not just satellites but strategic infrastructure for the future are where investments are going to occur. If you watch how quickly companies become a trillion dollars today, it's like the unicorns of old. Out of that group, you're going to see 10 trillion-dollar companies in my opinion. The challenge will be that these companies with trillion-dollar valuations have to move from being leading on technology to leading on execution, implementation, and efficient use of capital, which is why you see them going public. So this AI issue is not a bubble at all, Shireen — it is the future. It will get valuations that were the most valuable company in the world at Cisco at only 500 billion. However, the majority of AI startups will fail. And out of the magnificent 10 today that are trillion-dollar companies, a fair amount will not be in that mode three to five years from now. The speed of change and differentiation is there. Betting on one by itself is different, but I could not have been more excited about today. Elon Musk is clearly brilliant in the number of things he's able to do.
You know, the freshly minted trillionaire, the world's first trillionaire. But John, let's address the valuation question. A lot of debate has happened on whether these valuations are inspiring and jaw-dropping, but are they real? Do they really tell the story? And what does this set up for the likes of Anthropic and OpenAI as they head to the public markets? Does this open the doors and windows for them to extract these kinds of valuations as well?
I always start at the big picture, taking a step back at 2025 and 2026. You and I talked about our predictions. We said 2025 would be the era when all enterprise companies started to move to AI. Most people did not agree with that in December 2024, and we said by the end of this calendar year most companies across all industries would be well into implementation at the employee level. It was going to drive stock market productivity and returns at a pace we've never seen before. That's what AI does so well — productivity of a nation probably 3 to 5% in the US, and nobody's talking about that. The great productivity of the internet was 2%, up from 1.4%. So you're going to see a series of major IPOs followed by a lot of M&A activity, because if you're not breaking away and you're a larger company without a crisp AI strategy, you better acquire quickly. Will all of them be successful? No. The ones that are successful will do it at tremendous returns. There's never been this amount of money at this speed. It's like a racetrack designed for 120 mph, but the cars are going 240 mph. All it takes is a slight miscalculation and they're off the track. When that happens, the market's going to panic, but it's inevitable in terms of AI and the leverage it'll have for the next 5 to 10 years. All 26 of my startups are AI startups — I focused on this eight or nine years ago when people couldn't spell it.
You did a good job of that.
But you know, let's address the concerns. You said you don't believe this is a bubble, and many question that we are probably heading into bubble territory if we're not there already. Why do you think this is not a bubble?
When you really look at what a bubble is, it's a period when people had huge growth expectations and the market couldn't begin to meet those. The internet was talked about as a bubble from 1995 to 2000. The bubble happened because the implementation of the infrastructure for the internet — primarily service providers and then enterprise — didn't need as much capacity, so valuations had gotten high on multiples. Did the companies in that group continue to produce good profits? Cisco included. Yes. If you believe we're in the second inning, not of a nine-inning baseball game but a hundred-inning baseball game, the companies that come through this are going to do remarkably well. But it will first be on technology, then execution and implementation, then how well their competitors do. No sooner are you excited about two great companies like Anthropic and OpenAI, then they'll be competed aggressively with new startups and open models, putting huge pressure on their margins. I think that's extremely healthy. The speed of change is perhaps the major difference. With the internet, what took one year or five years, AI companies do in one. That ability to tie it to outcomes and results is key. I'm a portfolio player. I wish I could tell you all 26 of my companies will be successful; I know today two won't make it. But you are seeing speed of change like never before. You have to do a portfolio play. With the internet, the rising tide raised all boats. Now if you leave 5:1 ratios in speed, it says two years people can cycle in or out. What was the best capability two and a half years ago? OpenAI. Two years later, Gemini was the lead. A year later, Claude — and I use all three today depending on the vertical. So you're going to see tremendous valuations and returns, but it's about strategy, execution, efficient use of capital, and some train wrecks.
You know, we'll have to wait to see the train wrecks and where they'll come from and what will potentially trigger a train wreck. But let's talk about the infrastructure buildout and that super cycle charging on. Hundreds of billions of dollars individually by each company being spent on this infrastructure buildout. Do you still believe that demand is outstripping supply?
Yes, I do. There's no better example than looking at the stages of infrastructure. You see huge pressure on semiconductors, data centers, and power generation. Bloom Energy is one of my companies and I have a lot of faith in the job KR is doing. If you look at the average enterprise, there was an active discussion just six months ago about whether most employees would be using AI by the end of the year. If your employees aren't already being trained on AI and differentiating, you're behind and just taking baby steps. So it's very early in the demand opportunity. I've seen this movie before. Many people say I've had front row seats; I say no, I was in the middle of the playing field — with mainframes, Wang, the internet with Cisco, the cloud with Cisco, and now the AI implementation. The two big transitions were the internet and then AI. Everything we do will be tied to AI three years from now. Every employee will begin using it almost without exceptions by the end of this year. Leadership on nation states will be based on how well they do their AI implementation. That's one reason I believe the US and India will inevitably come very tightly together, although we occasionally hit little bumps along the way. So it's early stage, and I'm betting more and more on how it evolves.
