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25 Years After the Dot-Com Crash, Investors Weigh AI Boom's Bubble Potential

As tech stocks face a steep sell-off, experts debate whether AI-driven market enthusiasm mirrors the 2000 dot-com bubble or reflects a sustainable shift.

The current IPO slump has parallels to the one that followed the dot-com bust.
Buckner Hightower, left, and his son Chris Hightower examine the plunging stock market indices at the Nasdaq MarketSite, December 20, 2000 in New York City''s Times Square. The Nasdaq composite index was sharply down at midday after falling the day before to its lowest level in more than a year.
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Overview

  • The Nasdaq Composite has dropped 13% in the past month, raising concerns of a prolonged correction in tech stocks following years of AI-driven market growth.
  • Parallels are being drawn to the 2000 dot-com crash, which saw the Nasdaq lose 78% of its value over three years, though some argue the current market is fundamentally different.
  • Experts note that while AI hype has driven high valuations, companies like Nvidia demonstrate significant profitability, unlike many profitless firms during the dot-com era.
  • Market analysts suggest the current cycle is in the 'concern/fear' phase, with further declines possible due to economic uncertainty and trade policy impacts.
  • Some strategists argue the market is not in a bubble, citing the lack of IPO activity, restrained M&A, and more disciplined investment behavior compared to 2000.