"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. 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."
""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.""
Current AI boom shows striking parallels to late 1990s dot-com exuberance. The surge is driven by massive infrastructure spending—estimated at over $400 billion this year—and soaring valuations for firms like Nvidia that push equity markets toward prior dot-com peaks. The 1990s bubble wiped out many companies and shocked survivors, and the scale of today's AI investments could amplify damage from a downturn across tech, commercial real estate, and startups. Much AI investment is private and increasingly financed by tech giants' cash flows rather than by debt, which could shield retail investors. Key warning signs include overhyped valuations, rapid capital inflows, and questionable profitability, though bubble bursts can still produce dominant winners and eliminate laggards.
Read at Entrepreneur
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