Artificial Intelligence Bubble: A Large-Scale Comparison with Dot-Coms and Warning Signals for the Market
The current hype around artificial intelligence (AI) is not just reminiscent of the dot-com bubble of the late 1990s — it has surpassed it in several key metrics. A data analysis conducted by expert Hedgie reveals alarming parallels, but adjusted for far larger financial flows and a complex structure of debt obligations.
The lessons of the past are clear: the internet was a revolutionary technology, but most companies of that era went bankrupt, and their business models failed to withstand the test of time. Today's situation with AI, in my opinion, is even riskier due to the colossal volume of invested funds.
Key Differences in Scale
The main parallel I see is the scale of investment. According to my calculations, infrastructure spending during the dot-com era was about $500 billion. In the AI era, this figure has already reached $5.8 trillion — a more than 11-fold increase. The size of the largest initial public offerings (IPOs) is also incomparable: $4 billion versus $86 billion in favor of the AI sector.
A particularly alarming signal is the valuation of unprofitable companies. The largest unprofitable company of the dot-com era was worth about $100 billion. Today's equivalent is valued at $965 billion. This suggests that investors are willing to pay for potential rather than actual profit, which is always a sign of market overheating.
Structural Risks and Leverage
The main difference of the current bubble is its depth and complexity. While the dot-com bubble was mainly concentrated in the stock market, the current one includes private loans, project bonds, and even insurance company funds. All this money is flowing into the construction of data centers, creating a multi-layered structure that could trigger a chain reaction in the event of a collapse.
The examples I analyze confirm this vulnerability:
- Blue Owl has frozen investor withdrawals while simultaneously financing 80% of Meta's (banned in Russia) $250 billion campus.
- Oracle has had its rating downgraded almost to "junk" status: half of its order portfolio is tied to OpenAI.
- Anthropic has $90 billion in capacity lease obligations with zero profit ahead of its IPO.
My Expert Opinion
AI is a real technology, just like the internet in 1999. But the question is not about the technology, but about its valuation. Do the companies justify the sums investors are paying for them? Public reports will soon provide the answer. I expect the correction to be painful, and it will affect not only the stocks of tech giants but also the associated debt markets. Investors should be extremely cautious: the current AI bubble is not just a repeat of history, but a much larger and more dangerous version of it.