Former IBM Chair and CEO Sam Palmisano sees artificial intelligence (AI) as a transformative technology that is just beginning to make its mark. Drawing from decades of experience navigating corporate computing and the rise of the Internet, Palmisano shared his insights on the future of AI and its investment potential.

“We’re still in the early stages,” he said in a recent interview with Bloomberg, comparing AI’s development to the early days of the Internet. Just as enablers like Netscape and Cisco set the stage for giants like Amazon and Netflix, today’s enablers, Palmisano explained, are companies like Microsoft, NVIDIA and AMD. According to him, the current AI landscape is repeating the same phases of technological evolution.

In the short term, AI is expected to boost productivity, especially in areas like “customer operations, marketing and sales, software engineering, and R&D.” But Palmisano believes that true value creation lies in the next phase.

“The real innovation comes, real value creation comes in the next phase,” he said, where AI applications will begin to disrupt entire industries, just as Uber and Airbnb did for transportation and lodging.

When it comes to investment, Palmisano remains bullish on sectors such as healthcare and cybersecurity. He sees AI having a “massive impact” in these fields, especially in driving productivity and improving outcomes.

“We’re making bets in those industries where the technology could have a massive impact,” Palsimano said, which signals optimism for the long-term potential of AI.

For Palmisano, predicting AI’s ultimate winners and losers may be difficult now, but its trajectory is clear. “We have a long way to go,” he concludes, noting that AI, like the Internet, could follow a 10- to 15-year growth cycle.

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