AI: From hype & hope to business economics

Monday 12 October 2026 | 17:00 - 18:00 | Webinar

Every major disruption in business goes through a cycle, starting with hope (which is good) and hype (which is selling), followed by investment aimed at harvesting that hope. This is then confronted by the harsh reality that businesses built to do so must meet the requirements of any successful business: selling items at prices sufficiently above cost to generate enough profits and cash flows to cover their initial investment.

AI’s hope-and-hype cycle started with the unveiling of ChatGPT on November 30, 2022. Since then, that cycle has not only become a central part of virtually every market and business conversation, but has also given rise to perhaps the greatest and most compressed investment phase in history.

Collectively, companies have invested between $1.5 trillion and $2 trillion in AI, with a significant portion of that funding coming from debt. These investments have been made in anticipation of a lucrative market for AI products and services. This has created a divide between AI optimists, who argue that the investment is justified because the market will be “huge” (while leaving that market largely opaque), and AI skeptics, who believe there is no market profitable enough to justify investment of this magnitude (again, with considerable opacity).

Professor of Finance at NYU's Stern School of Business Aswath Damodaran, argues that both sides are making incomplete arguments. The optimists miss the point that a huge market does not necessarily translate into huge profits and value, while the skeptics bypass the reality that AI has the potential to replace high-priced labour and that the resulting market is likely to end up with a few dominant players.

Aswath tries to bridge this gap by creating a framework for assessing the AI business. The framework starts with the size of the market (or TAM, in VC terminology), moves on to industry structure (unit economics, economies of scale, and moats), and then considers external pressures and constraints, including political and regulatory pushback.

Rather than impose his own view on whether AI capital expenditure makes sense, and by extension justify the market capitalisations of the public and private businesses making these investments, he hopes that the framework he provides will allow attendees not only to parse the competing viewpoints but also to make own judgments about how AI will alter lives, work, and business, and how much value should be attached to the players in the space.

Who should attend?

• Portfolio Managers and Fund Managers evaluating AI-related investment opportunities.
• Equity Analysts covering technology, software, semiconductor, and digital infrastructure sectors.
• Research Analysts assessing the long-term profitability and valuation of AI businesses.
• Private Markets, Venture Capital, and Private Equity professionals evaluating AI growth investments.
• Chief Investment Officers and Investment Strategists monitoring the impact of AI on capital markets and asset allocation.
• Wealth Managers and Investment Advisers seeking to understand AI's implications for client portfolios.
• Risk, Governance, and ESG professionals analysing regulatory, operational, and societal considerations surrounding AI.
• Corporate Finance and Valuation specialists assessing the effect of AI investment on company value creation.

Speaker

Aswath Damodaran, Professor of Finance, NYU's Stern School of Business

Aswath Damodaran holds the Kerschner Family Chair in Finance Education and is Professor of Finance at NYU's Stern School of Business, where he has taught corporate finance and valuation since 1986. He previously lectured at the University of California, Berkeley, and holds an MBA and PhD from UCLA. He is the author of widely used texts on valuation, corporate finance, portfolio management and risk, including Narrative and Numbers and The Corporate Life Cycle, and has published in the Journal of Finance, the Journal of Financial Economics, the Journal of Financial and Quantitative Analysis and the Review of Financial Studies.

His blog, Musings on Markets, has been read more than 25 million times, and the financial press has long since settled on calling him the Dean of Valuation.

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