While Wall Street grapples with concerns about an artificial intelligence bubble, India finds itself in a completely different scenario - one of minimal AI activity that raises serious questions about the country's technological future. The recent decision by Infosys to use its funds for share buybacks rather than creating new AI-focused businesses highlights this growing concern.
The AI Bubble Warning Signs
American investor Michael Burry, famously portrayed in The Big Short, has recently made a significant bearish bet against AI giants. In November 2025, Burry purchased put options worth more than $9 million in two AI heavyweights: Nvidia and Palantir. This move comes despite Nvidia's impressive 12-month trailing price-to-earnings multiple of around 54 and Palantir's staggering price-to-sales ratio of 86 with a forward price-to-earnings ratio nearing 250.
The market reaction was immediate. Following Burry's bet, Palantir's shares dropped approximately 8%, despite reporting strong third-quarter earnings. Nvidia also experienced temporary declines before recovering on solid earnings and positive growth outlook. This situation reveals the interconnected nature of tech companies riding the AI wave, where confidence cracks in one player could potentially trigger broader declines.
India's Concerning AI Vacuum
While global markets wrestle with AI mania, India presents a starkly different picture. Several Indian IT services companies have begun mentioning AI as part of their service offerings, but the country lacks mainstream, AI-focused domestic companies experiencing significant growth or decline. This absence raises crucial questions about India's positioning in the global AI race.
The contrast with other nations is particularly striking. West Asian countries are leveraging their energy resources to become major players in data centers and AI development. Saudi Arabia is investing sovereign wealth into HUMAIN - an extensive program covering data centers, foundation models, local-language AI, and industrial AI solutions. Similarly, the UAE has implemented a comprehensive National AI Strategy 2031, while China aggressively deploys AI across business sectors to gain competitive advantages.
Infosys's Strategic Choice
Infosys's decision to prioritize share buybacks over AI investment becomes particularly significant in this context. Rather than channeling funds into developing AI tools and solutions, the company has chosen to repurchase its shares. This approach contrasts sharply with global trends where major technology firms are aggressively investing in artificial intelligence capabilities.
While developing large language models from scratch represents a substantial challenge for any company, creating applications using open-source or licensed models from established players presents a more accessible opportunity. This path could prove particularly impactful for Indian companies seeking to establish themselves in the AI landscape.
Potential Pathways for India
India has several strategic advantages that could facilitate AI adoption and development. The government could pioneer the creation of indigenous foundation models, while individual companies focus on developing applications and business solutions based on existing AI models. Following IBM's example, Indian firms could offer enterprise-wide data intelligence that extends beyond the limited sectoral solutions currently being tested.
The country's linguistically homogeneous regions, comparable in size to independent nations worldwide, present unique opportunities. AI models operating in Indian languages could significantly boost productivity for small and micro enterprises that already utilize digital payments and GST systems.
The risk of sitting out the AI revolution entirely may outweigh the danger of participating in a potential bubble. While bubbles eventually deflate, they often leave behind long-term survivors and valuable infrastructure. Avoiding the AI wave completely could result in Indian companies falling permanently behind global competitors in technological capability and market positioning.
