Shlomo Kramer, CEO of cybersecurity firm Cato Networks, has sounded a cautionary note about the current state of the AI industry, suggesting that the tech sector may be experiencing a bubble reminiscent of the dot-com era. Speaking with Business Insider, Kramer stated plainly: “We are in a bubble.” He attributed the bubble to an unsustainable surge in investment and early profits driven by AI, which he believes is creating a disconnect between inflated valuations and actual business outcomes. “There's a dislocation there; it's big and it's going to unwind,” Kramer warned. While he firmly believes in AI’s transformative potential, Kramer questioned whether current investments are aligned with the pace of real-world returns. “It's going to happen at a much slower pace than right now,” he said, emphasizing that AI’s impact is still limited and far from widespread. Kramer pointed out that while AI shows promise in areas like customer support, it hasn’t yet replaced human agents at scale. “It may be able to replace the first level of support, but that isn’t where companies face the highest cost,” he said. “It's simply not there yet.” He also downplayed AI’s current influence on engineering teams. While he acknowledged AI could enhance productivity in specific tasks, he said it hasn’t replaced engineers. “It’s modest,” he said of AI’s overall impact on engineering. “It’s not ready to take over.” Kramer expressed skepticism about corporate claims that AI is leading to widespread layoffs in engineering. “I highly suspect that all these companies that said they are firing engineers because they now have AI actually used AI as a cover story,” he said. He noted that despite some reduction in entry-level roles, many companies—including Cloudflare—have continued hiring and even expanded internship programs. Kramer joins a growing chorus of tech leaders weighing in on the debate over whether AI is overhyped. While some, like Nvidia CEO Jensen Huang, deny the existence of a bubble, Meta’s Mark Zuckerberg has argued the greater risk lies in underinvesting. OpenAI’s Sam Altman, a key figure in the AI boom, has acknowledged that investors are “overexcited about AI.” Despite the optimism, Kramer stressed that even with powerful tools like ChatGPT, predicting the long-term trajectory of AI remains uncertain. The future of the industry, he said, hinges not just on technology, but on whether companies can deliver meaningful value that justifies current expectations.