Why AI tokens are emerging as high-conviction investment theme in 2025

Time of India

17-05-2025

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What Are AI Tokens?
Why Now?
What Are the Use Cases?
Final Thoughts
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com .)
The AI sector continues to ride a strong upward momentum. Just this week, AI-focused crypto tokens added nearly $10 billion in market capitalization, with several top assets rallying over 100% in seven days. Backed by real advancements in AI agent technology and token utility, this surge is more than just market noise—it reflects a broader convergence of artificial intelligence and decentralized finance that investors can no longer afford to ignore.The buzz isn't limited to price action. Several real-world projects are bringing the power of AI to everyday users in simple and useful ways. For instance, Magic Labs, backed by PayPal, has launched Newton—an AI assistant that can automatically manage DeFi investments like trading and earning interest, all while keeping users' information secure and private.Another example is Pixel AI, a game built on the Solana blockchain, where players can earn rewards by competing for digital space using the $PIXAI token. And then there's GAIB, which has introduced AID Alpha—a digital asset backed by income from high-performance computer chips (GPUs), giving investors a new way to earn returns from the growing demand for AI computing.AI tokens are digital assets that combine artificial intelligence and blockchain to power decentralized applications such as data processing, intelligent indexing, autonomous trading strategies, and GPU (Graphics Processing Unit) sharing. GPUs are high-performance processors optimized for parallel computations, making them essential for training and running advanced AI models.Within the Web3 ecosystem, these tokens serve multiple roles—they are used to pay for services, reward contributors, and participate in protocol governance through voting mechanisms. Their utility across various functions fuels demand, which in turn can drive up token value. Simply put, the more an AI platform is used, the greater the potential value of its native token—making AI tokens central to the evolution and economic sustainability of decentralized AI networks.In essence, AI tokens are functional instruments that back real use cases in the evolving Web3 ecosystem.Three powerful forces are driving the rise of AI tokens. First, mainstream AI adoption is accelerating—companies like Nvidia have surpassed a $3 trillion market cap, while generative AI tools such as ChatGPT have become household names, firmly establishing AI as a core layer of the future tech stack.Second, blockchain is emerging as the ideal infrastructure for AI—transparent, decentralized, and programmable—enabling autonomous AI agents to operate with verifiable accountability through smart contracts. Third, the surge in AI token valuations—averaging over 2,900% in 2024—has captured the attention of both retail traders and institutional investors, including hedge funds, who are now exploring AI-linked crypto assets as a high-growth frontier beyond traditional markets.Assets are only as strong as the technology they are built upon—and in the case of crypto, that foundation is everything. AI tokens are emerging as high-potential digital assets precisely because they are rooted in powerful, rapidly advancing technologies at the intersection of artificial intelligence and blockchain. One of the most compelling use cases is autonomous AI agents—platforms like Virtuals enable users to create tokenized agents that perform predefined tasks such as executing trading strategies or managing cross-chain interactions with minimal human intervention. Beyond automation, these tokens are facilitating the rise of decentralized marketplaces for data, compute power, and AI model sharing, laying the groundwork for a more open and inclusive AI economy.AI tokens are also being used to power predictive analytics platforms, which apply machine learning models to forecast crypto market trends—providing traders, funds, and institutions with timely, data-driven insights. At the infrastructure layer, projects like GAIB are tokenizing access to income-generating GPU supply chains, allowing investors to earn yield from AI compute resources—essentially unlocking exposure to the hardware that fuels AI innovation.AI tokens are no longer a side story—they are fast becoming the main plotline in both crypto and tech investing. For equity investors looking to diversify, and for crypto traders seeking fundamentally-backed narratives, AI tokens offer exposure to one of the most promising intersections of technology today.(The author Paras Malhotra is SVP - Trade, Custody and BizOps, CoinDCX. Views are own)