Comparison of today’s artificial intelligence and the Dot-Com bubble in the late 1990s became impossible to ignore. When AI, the company orders hundreds of billions – by 2025 alone. Dozens of new billionaires – and technology giants pour unprecedented amounts into data centers, investors and analysts ask a similar question: Do we observe how history is repeated?
Similarities are staggering. As with internet companies two decades ago, AI firms today attract huge investments based on transformational potential rather than current profitability. According to Stanford University research, Global Corporate Investment was $ 252.3 billion in 2024, The sector has grown thirteen times. Meanwhile, the largest American technology companies – Amazon, Google, Meta and Microsoft – were promised to spend a record $ 320 billion for this year, for AI infrastructure alone.
Even the Openai CEO Sam Altman, whose company is valued at about $ 500 billion, despite the fact that the ChatgPT started just two years ago, recognizes parallels. ‘
Are we at a stage where all investors are too much related to AI? My opinion is “yes,” said Altman in August. – Is it the most important thing to happen over a very long time? My opinion is also that way. ‘
But what really caused the Dot-Com Bubble in 2000. March And what lessons does he offer today AI boom? Let’s take a strip of memory or, if you haven’t born, a little simple ole story.
The Dot-Coma disaster was not caused by one event, and the rapprochement of the factors that revealed fundamental weaknesses in the technology economy at the end of the 1990s. The first critical blow came from the federal reserve, which several times increased interest rates during the 1999 and 2000. Federal funds increased from about 4.7% in 1999. At the beginning of up to 6.5% to 2000 In May, speculative investment was less attractive because investors could earn a higher return from safer bonds.
The second catalyst was a broader economic downturn that began in Japan in 2000. In March, the global market was fears and accelerating the flight from risky assets. This over -the -tariff and global uncertainty has forced investors to re -evaluate the astronomical assessments of Internet companies.
But the main problem arose much deeper: most Dot-com companies had essentially flawed business models. Commerce One has reached the value of $ 21 billion despite the minimum income. The Theglobe.com, founded by two Cornell students with a $ 15,000 Startup Capital, jumped 606% to $ 63.50 on the first day of the trade, despite the fact that they had no income exceeding risk financing. Pets.com burned $ 300 million within 268 days before declaring bankruptcy.
Perhaps the very instructive parallel for today’s AI boom is in a huge infrastructure too much in the investment that took place against the Dot-Commem disaster. Telecommunications companies have helped more than 80 million miles of fiber optical cables throughout the US, prompted by Worldcom’s insanely inflated statement that the Internet flow has increased every 100 days – more than the actual annual doubling percentage.
Companies like Global Crossing, Level 3 and Qwest raced mass networks to capture the intended demand that never happened. The result was catastrophic excess. Even four years after the bubble exploded, 85% to 95% in the 1990s remained unused and earned the nickname “Dark Fiber”.
The world’s largest optical fiber manufacturer, Corning, has fallen from nearly $ 100 in 2000. Up to about $ 1 until 2002 Ciena’s revenue has fallen from $ 1.6 billion to $ 300 million almost overnight, with its stock dropping by 98% from the peak.
Parallels with today’s AI infrastructure are unquestionable. Meta CEO Mark Zuckerberg announced this year’s plans for the data center that “such a big part could cover a large part of Manhattan.” The Stargate project, supported by Openai, Softbank, Oracle and MGX, aims to create a $ 500 billion AI data centers.
However, there are fundamental differences. Unlike many Dot-Com companies that have no revenue, the main AI players receive high income. Microsoft’s Azure Cloud Service, with the focus of AI, increased by 39% to $ 86 billion a year. Based on the end of the year, Openai designs $ 20 billion annual income InformationFrom about $ 6 billion at the beginning of the year.
The Dot-Commem disaster was finally due to the harsh reality: most online companies could not justify their assessments with the actual business results. Companies were evaluated in the light of the flow of websites and growth metrics, not traditional measures such as cash flow and profitability.
Today’s AI companies have a similar test. Although AI’s investment has reached its historic level, the income difference remains large. According to Tech writer Ed Zitron, Microsoft, Meta, Tesla, Amazon and Google, will invest about $ 560 billion in AI’s infrastructure in the last two years, but only $ 35 billion in AI related income.
A recent MIT study found that 95% of AI’s test projects do not produce significant results, despite more than $ 40 billion generative AI investment. This disconnection between investment and return repeats the main problem that eventually condemned the Dot-Com bubble.
The question of which investors face today is not whether the economy will change – most experts agree that it will do so. The question is whether current evaluation and infrastructure investment can be justified in the return of the nearest period, or as in the 1990s, the most Optical cables of the 1990s, the majority of today’s AI infrastructure will be unused until the market is waiting to catch up with supply. As history shows, even the transformation technology cannot avoid the attraction of the gravity economy – so although the internet has changed the world, it has not happened as quickly as some early champions have promised, and several of those people who have overtaken themselves were humiliated during the process.
For this story Fortune The generative AI is used to help the original draft. The editor checked the accuracy of the information before publishing.
This story was initially displayed by fortuna.com
