The current hype around artificial intelligence has already significantly surpassed the infamous dot-com bubble of the late 1990s in scale. As an experienced analyst, I have conducted a detailed comparison of these two eras, and the conclusions are, frankly, alarming: by a number of key indicators, the AI boom has turned out not just larger, but radically more massive.
Shocking Numbers
A key parallel can be seen in the volume of capital investments. During the dot-com era, infrastructure spending amounted to about $500 billion. Today, in the AI era, this figure has soared to an astronomical $5.8 trillion — a difference of more than 10 times. The sizes of initial public offerings (IPOs) are also incomparable: the largest IPO of the dot-com era raised about $4 billion, while in the AI sector this figure reached $86 billion.
Particularly alarming is the valuation of unprofitable companies. The largest unprofitable company of the dot-com era was worth about $100 billion. Its modern counterpart in the AI field is already valued at $965 billion. This indicates an unprecedented level of speculative capital seeking returns without regard for fundamental indicators.
Symptoms of Overheating: Lessons from the Past
The market is showing classic signs of overheating. Unprofitable companies are going public at the peak of the hype, and we are already seeing, for example, SpaceX going into the red a month after the largest IPO in history. Moreover, the buyer financing scheme launched by Nvidia repeats the fatal mistakes of Lucent and Nortel in the late 1990s, which ended in some of the largest bankruptcies in U.S. history.
Why the Current Bubble is More Dangerous
The main danger of the current bubble is its multi-layered nature. While the dot-com bubble consisted mainly of stocks, the current one includes private loans, project bonds, and even insurance company funds. All this money is flowing into data center infrastructure. This creates an extremely fragile structure.
Alarming signals are already visible: Blue Owl froze investor withdrawals while simultaneously financing 80% of Meta's campus in Louisiana for $250 billion. Oracle's rating was downgraded to nearly "junk": half of its order portfolio is tied to OpenAI. Anthropic has $90 billion in capacity lease obligations with zero profit before its IPO.
My conclusion: AI is a real technology, just like the internet in 1999. But the question is not about the technology itself, but its valuation. Do companies justify the sums being paid for them? Public reports will soon provide the answer, and judging by the scale of the bubble, this answer could be painful for the entire market.