An intense AI investment boom resembles the 1990s internet bubble, where widespread optimism created many speculative companies and a few lasting winners. Historical experience shows that bubbles focus capital and attention on transformative technologies, accelerating development while also producing numerous failures. Many current AI startups may fail, but a small number of dominant firms are likely to remain. Investors should recognize the pattern: bubbles can be constructive yet risky, and prudent participation often means avoiding speculative plays. Personal history with the dot-com era and subsequent media ventures informs perspectives on navigating the current AI frenzy.
In the late 1990s, everyone was convinced that the internet was the future - and that by buying the stock of internet companies like the theGlobe.com you could get really rich. They were half-right: You're reading this on the internet. But all that remains of theGlobe is a mothballed web domain. We could see the same thing this time around with AI, says Henry Blodget. And he says that wouldn't be a bad thing.
Blodget has a very particular perspective on booms and busts, since he was a central figure in the rise and fall of the first internet bubble. On the way up, he was a celebrated Wall Street analyst; afterward, the Securities and Exchange Commission charged him with fraud - a complaint he settled without admitting or denying guilt. After the dot-com era, Blodget went on to found the publication you're reading now (I was his first hire), and is now putting out his own publication and podcast.
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