New Year outlook: Brutal conflicts and AI excesses may persist, but let’s hope for a soft landing

The ignoble gong for ‘most dangerous trend of the year’ must go to the stubborn conflicts that have refused to settle for a peaceful resolution, despite global intermediation and mass decimation of life and property. Many of these conflicts are likely to continue well into 2026.

During his first papal tour overseas, Pope Leo XIV told a gathering of Turkish authorities, civil society delegates and members of the diplomatic corps at Ankara that, piecemeal, a third world war is being waged.

“We are now experiencing a phase marked by a heightened level of conflict on the global level, fuelled by prevailing strategies of economic and military power…The future of humanity is at stake. The energies and resources absorbed by this destructive dynamic are being diverted from the real challenges that the human family should instead be facing together today, namely peace, the fight against hunger and poverty, health and education, and the protection of creation.”

On one side, there is the unrelenting Russia-Ukraine war in which thousands of young lives continue to be snuffed out daily, not to mention the widespread destruction of habitat, irreversible damage to the environment and long-term harm to economic or productive energies. Israel continues to wage a cruel and unjust war on Gaza’s hapless, defenceless citizens by blithely violating ceasefire agreements.

Across the Red Sea, Sudan has been in the throes of a deadly civil war between the Sudanese Armed Forces and Rapid Support Forces since April 2023, a conflict that has claimed close to 21,000 lives in 2025 and displaced over 12 million people. A global seam of bloodlust and wanton hostility seems to have seeped across many national boundaries—Myanmar, Yemen, Ethiopia and Somalia, among others.

While the demon of war and bloodshed is proving to be indomitable, the ghost in all our machines—artificial intelligence (AI)—will acquire ubiquity during the coming year by either making or breaking fortunes.

Doubts and suspicions have started surfacing over whether 2026 will usher in a sobering morning for the AI euphoria that has sent capital markets into bullish territory over the past few months, disregarding the dampening effect of US President Donald Trump’s tariff tantrums. As reservations and misgivings arise, an uncertain and indistinct pall now hangs over the capital markets globally.

Many tech companies have rushed herd-like to build massive AI infrastructure, the desperation resembling a gold rush. Every tech company is in a tearing hurry to stack up AI infrastructure and cash in on what is viewed as an inevitable future revenue source.

There is only one problem in this desperate scramble: a substantial part of this capital expenditure is being financed by borrowing billions of dollars. According to some reports, Microsoft, Amazon, Meta and Google alone are estimated to have spent $350 billion as capex during 2025. But here’s the nub: OpenAI’s commitment to spend $1.4 trillion over the next eight years sits uneasily with its $20-billion revenue projected for 2025.

This, and many other similar examples, have spooked markets. Apprehensions that many of these companies may not be able to generate revenues commensurate with their borrowings have multiplied after independent surveys showed that enterprise investment in AI has had no significant impact on bottom-lines so far. This has sparked off a nervousness about the likelihood of a meltdown resembling the dotcom bust.

What has added to the fears are two other factors. First came statements from OpenAI chief executive Sam Altman and Google chief Sundar Pichai cautioning markets about an irrational AI boom.

Second, the word ‘circularity’ has cropped up a lot in AI discussions, indicating that companies have invested in each other in an incestuous loop that multiplies risks to systemic stability. For example, chip-maker Nvidia has committed a $100-billion investment in OpenAI, with the money being used to buy processing units from Nvidia.

OpenAI’s circularity touches other tech companies as well, like Oracle and AMD. Competitor Anthropic flipped back the investment it received from Microsoft and Nvidia as payments for Azure cloud and chip purchases. If any one piece of this domino topples, it could bring down the entire chain.

But a counter-narrative also has emerged. Many analysts feel that even after an AI bubble bursts, there will be value available in the rubble and that an industry shake-up will throw up more efficient and productive AI companies. For instance, writing in the New York Times, bond-trader-turned-professor Mohamed A. El-Erian argues that though some tech companies will definitely lose after the bubble bursts, mankind would be left better off overall from the benefits of AI’s “transformative power.”

It is now certain that bloody wars and big investments in AI technology will continue well into 2026. Hopefully, Russia will heed global demands for a long-term ceasefire. Likewise, let us pray the AI meltdown has a soft landing, without displacing too many jobs and deepening an economic crisis. After all, hope is all we can do.

The author is a senior journalist and author of ‘Slip, Stitch and Stumble: The Untold Story of India’s Financial Sector Reforms’ @rajrishisinghal.