This Tech Analyst Saw the Dot-Com Bubble Burst. He Says That AI Is Next.
Henry Blodget, once a star tech analyst during the late 1990s and early 2000s, sees "striking parallels" between today's artificial intelligence boom and the pre-crash exuberance of internet stocks, he writes in a Substack post.
He attributes the AI surge to massive infrastructure spending—estimated at over $400 billion this year—and ballooning valuations for giants like Nvidia, which have pushed equity markets near peak levels previously seen only during the dot-com bubble.
Blodget says that while the internet was transformative, the 1990s bubble wiped out many companies and shocked even the best survivors. Similarly, he warns that the scale of today's AI investments could amplify the impact of a downturn, with repercussions not just for tech but across the commercial real estate and startup sectors.
Related: OpenAI CEO Sam Altman Says Older Workers Need to Embrace AI — or Face Losing Their Jobs
But he draws important distinctions from the dot-com era: much of the current AI investment is now private, which could protect retail investors if a bust occurs, and many projects are financed by the cash flows of tech giants rather than by debt.
While he's not sure exactly when it will happen, Blodget believes the AI bubble is real: overhyped valuations, rapid capital inflows, and questionable profitability echo the warning signs of the late 1990s.
People like OpenAI's Sam Altman also agree that the artificial intelligence industry is in a bubble, but history reminds us that bubble bursts often have winners who survive and leave competitors in the dust.
"Barnes & Noble, Walmart, and other massive retailers that initially pooh-poohed the Internet never caught up with Amazon," reminds Blodget. "Executives who dismissed e-commerce and other Internet trends as 'fads' were soon relieved of command."
Blodget writes that, "Before a bubble bursts, it's a boom," adding that booms can last for many years. "So if your plan is to just sit out the current AI craziness, you might want to consider the other kind of risk you're taking — the risk of missing out while everyone else races ahead."
Related: In the Age of AI, These Skills Will Keep Marketers Essential
Henry Blodget, once a star tech analyst during the late 1990s and early 2000s, sees "striking parallels" between today's artificial intelligence boom and the pre-crash exuberance of internet stocks, he writes in a Substack post.
He attributes the AI surge to massive infrastructure spending—estimated at over $400 billion this year—and ballooning valuations for giants like Nvidia, which have pushed equity markets near peak levels previously seen only during the dot-com bubble.
Blodget says that while the internet was transformative, the 1990s bubble wiped out many companies and shocked even the best survivors. Similarly, he warns that the scale of today's AI investments could amplify the impact of a downturn, with repercussions not just for tech but across the commercial real estate and startup sectors.
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