DBS research chief sees AI correction, not dot-com repeat
DBS Group Research head Timothy Wong says an AI market correction is possible but a dot-com-style crash is unlikely because current investment is backed by real revenue. He urges Asia to adopt AI intentionally, citing a capital misallocation and a once-in-a-lifetime opportunity for legacy firms.
An AI market correction is possible, but a dot-com-style crash is unlikely because today's buildout is backed by real revenue, not speculation, according to Timothy Wong, DBS's head of group research.
"Looking back at history — steam engines, railroads, the dot-com era — there was always a bust. But once the technology gets embedded, it drives growth," Wong said at a briefing on the bank's new "Intentional AI" report. He pointed to significant revenues at firms like OpenAI and Anthropic: "There's real demand, real cash flow."
Wong said capital is not scarce but misallocated. More than 70 per cent of capital goes to North America, and more than 70 per cent of new installations are in mainland China. "All we need is for investors to swing a little bit more incrementally to Asia," he said. He argued Asia need not compete in building frontier models: "The US is doing it big time, China's figuring out how to do it cheaper. Let's leverage what these two superpowers are doing and solve problems of people and planet in our markets."
Wong's central message was aimed at legacy businesses, not startups. "At which other point in history do you have an opportunity to take world-class capabilities to solve global problems and apply that to your existing business? It's a once-in-a-lifetime opportunity," he said. He warned adoption cannot be cosmetic — "It's not lipstick on a pig" — and framed his prescription as "intentional AI," beginning with purpose. He cited a palm oil company he advised to reposition as a data company, stressing most of this needs no fresh capital: "Instead of building a new headquarters, invest in this line of business."
The report argues frontier AI is commoditizing as open-weight models close the gap, shifting advantage from having answers to "knowing which questions to ask." That opens the door, Wong said, for Asia to break from a model where "the West writes the brief and Asia executes." Examples included using AI to ease Bangalore's traffic for a fraction of the cost of a ring road. He stressed the trust layer cannot be imported: "Someone in China or India won't trust a US corporation with their life — but they will trust their government."
DBS chief China and Hong Kong economist Mo Ji highlighted China's AI ambitions under its next five-year plan, targeting deep economy-wide integration. She pointed to an "energy dividend" — renewable energy's share of production rising from around 4 per cent to 18 per cent — alongside manufacturing dominance and a deep pool of engineers, arguing AI could push China's medium-term growth.
DBS senior rates strategist and executive director Eugene Leow said markets are pricing in "somewhat overheating" conditions, with a few more rate hikes expected over the next year, and he forecasts the US benchmark rate to rise to 4.5 per cent. He flagged an unusual twist: long-tenor AI investment demand is pushing up real 10-year bond costs, and the risk premium on emerging Asian debt over developed markets has compressed — meaning investors are "no longer getting a sizable premium" for Asian risk.
The report, "Intentional AI," is available from DBS Group Research. Companies cited are illustrative examples, not recommendations.