Sridhar Vembu says Zoho will stay out of AI investment bubble chase

Zoho founder Sridhar Vembu says the company will stay away from what he describes as an AI investment bubble, even as tech giants continue spending billions on infrastructure. Instead, Zoho plans to focus on AI capabilities such as data curation, reinforcement learning and output verification.

In Short

• Vembu says Zoho will not join the AI infrastructure spending race
• Zoho to invest in data curation, reinforcement learning and AI verification tools
• Remarks come after IBM CEO Arvind Krishna questioned returns from trillion-dollar AI investments

As technology companies pour billions of dollars into artificial intelligence infrastructure, Zoho founder Sridhar Vembu says his company will not be joining what he believes is an AI investment bubble. Vembu made the remarks in response to IBM CEO Arvind Krishna, who recently questioned whether the massive spending underway across the AI industry can generate returns large enough to justify the investment.

Krishna argued that the cost of building AI infrastructure at the scale being discussed by some companies could run into trillions of dollars, raising doubts about the economics behind the race to achieve artificial general intelligence (AGI). Responding to those concerns, Vembu said Zoho would continue investing in AI but would avoid chasing the industry's infrastructure spending boom.

"IBM CEO Arvind Krishna says the muli-trillion dollar AI data center build out is a bubble. We are investing in creating capabilities like data curation, reinforcement learning, and most crucially the compiler infrastructure to ensure AI output can be verified but we will not chase the investment bubble. This is just our normal prudence. To some people that would sound defeatist, but we will talk in 5 years," Vembu wrote on X.

The comments offer a clear indication of how Zoho plans to approach AI as rivals continue spending aggressively on data centres, chips and computing capacity. According to Vembu, the company will focus on areas such as data curation, reinforcement learning and technologies that help verify AI-generated outputs rather than pursuing large-scale infrastructure expansion.

Why Vembu agrees with concerns around AI spending

Vembu's remarks came after Krishna publicly questioned whether the current pace of AI investment is financially sustainable. Speaking recently about the industry's ambitions, the IBM chief estimated that infrastructure spending linked to the pursuit of AGI could eventually reach trillions of dollars.

Krishna argued that investments of that scale would require enormous profits to generate meaningful returns, making it difficult to justify the spending. While he remains optimistic about the business potential of generative AI, he has also expressed doubts that existing technologies alone are enough to achieve AGI.

Not the first time Vembu questioned the AI boom

Vembu's latest remarks are consistent with the concerns he has been raising about the AI industry over the past few weeks. The Zoho founder has repeatedly argued that the excitement around AI is running ahead of the real-world benefits being delivered so far.

Earlier, he questioned the growing practice of linking layoffs directly to AI. In a post on X, Vembu wrote, "It does not help that companies are blaming job losses on AI, which is both convenient and as an added bonus, makes a company look visionary." He added that "The layoffs are related to rising cost pressures," suggesting that economic realities, rather than breakthroughs in AI, are driving many workforce reductions.

More recently, Vembu warned that the economy cannot rely on AI investment forever. "The AI investment bubble has kept the US economy afloat but that can only go on for so long," he wrote. In the same discussion, he argued that "AI will not magically cure global imbalances," pushing back against the belief that AI alone can solve deeper economic challenges.

He has also questioned one of the key assumptions behind the current spending spree that AI tools will dramatically improve software development productivity. According to Vembu, companies are investing hundreds of billions of dollars based on expectations that productivity could increase many times over, but evidence supporting those claims remains limited.

His comments are gaining attention at a time when some technology leaders are also softening earlier predictions about AI-driven job losses. OpenAI CEO Sam Altman recently admitted that the large-scale disappearance of entry-level white-collar jobs has not happened as quickly as he expected, while Amazon founder Jeff Bezos and Nvidia CEO Jensen Huang have argued that AI is more likely to improve productivity than completely replace workers.

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