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The Bottom Line: After a $1 trillion software stock rout, AI founders and VCs at Web Summit Qatar say the "software apocalypse" narrative is overblown—but they admit AI valuations need a reality check.

This week sent shockwaves through Silicon Valley. Microsoft, Salesforce, and other software giants lost a combined trillion dollars in market value, sparking fears that AI would render traditional software obsolete. But on the ground in Doha, Qatar, the people building AI's future are pushing back hard against the doom-and-gloom narrative.

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Arvind Jain, founder of Glean, the AI search company now valued at $7 billion, doesn't believe AI will make software-as-a-service obsolete. His take? AI is transformative technology that needs to be integrated into existing products and services, not replace them entirely.

The key to survival, according to Jain, is embedding AI capabilities into software products. Companies that successfully integrate AI will thrive; those that resist will struggle.

While defending software's future, AI leaders weren't shy about admitting the industry's valuation problem. Andrey Khusid, founder of the $17 billion collaboration platform Miro, was blunt: AI valuations are inflated and will be correct within the next two years.

Larry Li, a venture capitalist at Amino Capital and Forbes Midas List member, echoed this sentiment. The bubble is deflating, he says, especially for large companies. It's just a matter of time.

Multiple founders and investors drew comparisons to the dot-com era. The consensus? Most AI startups will fail, but the survivors will become the generational winners of this technological revolution.

There's one crucial difference this time: many AI companies are generating actual revenue, not just burning through cash on promises. While valuations may still be excessive, the underlying business models are sounder than during the late-1990s internet bubble.

Despite rumors that OpenAI and Anthropic are racing to go public, some AI leaders are in no rush. Khusid said Miro has been profitable for years and prefers staying private to avoid public market pressures.

Jain pointed out another challenge: public markets demand predictability, but the AI landscape is shifting too rapidly for companies to make reliable forecasts. Staying private gives them flexibility to pivot and experiment.

Non-AI startups are facing tougher fundraising conditions as they're benchmarked against AI companies experiencing explosive growth rates that traditional businesses simply can't match.

By the Numbers

The AI investment frenzy shows no signs of slowing down:

When discussing the competition between the United States and China, venture capitalist Larry Li offered a nuanced view: the U.S. leads in innovation, while China has advantages in scaling, supply chain capacity, and the sheer number of AI engineers.

Most attendees agreed there's room for both countries to succeed - with growth potential for both closed models like OpenAI and open-source alternatives being developed globally, including in China.

Despite this week's market turbulence that saw software stocks crater, the Dow Jones crossed the historic 50,000 mark - demonstrating continued enthusiasm for the AI revolution. The takeaway from Doha seems clear:

The AI bubble may be inflating, but unlike previous tech booms, this one appears to have more substance beneath the froth. The question isn't whether AI will transform software, it's which companies will successfully make the transition.

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