Comparing the coming crash to the dot com crash is like comparing a rough landing to the various crashes on Sept 11th, 2001.
The dot com crash was mostly isolated in high tech. Because it was lead by the Japanese economy starting to fail, and followed by the Sept 11th attacks, the various combined crashes resulted in the S&P 500 falling by about 50% from its peak to the bottom, but it was already back up to the peak value in 2007, then the global financial crisis hit.
Nvidia’s stock price has gone up 1700% in just 2 years. OpenAI is planning to go public on a valuation of $1 trillion despite losing vast amounts of money. Just 7 US tech companies make up 36% of the entire US stock market, and they’re all heavily betting on AI.
At least when the dot com bubble popped, it left some useful things behind, like huge amounts of dark fibre. But, the AI processors are so specialized they can’t be used for much of anything else. They also wear out, sometimes within months. The datacenter buildings themselves can maybe be repurposed to being general purpose datacenters, but, a lot of the contents will have to be thrown out.
AFAIK none of the previous AI bubbles really had much investment. There was hype, but it was hype within the computer science, or cognitive science fields. But, maybe there’s a financial bubble bit that I’m missing.
I don’t know about how they compare in scale, but corpos were spending billions on business AI solutions, and there were specialised technologies that died when the bubble burst.
The dot com bubble 2.0 is on the horizon
Comparing the coming crash to the dot com crash is like comparing a rough landing to the various crashes on Sept 11th, 2001.
The dot com crash was mostly isolated in high tech. Because it was lead by the Japanese economy starting to fail, and followed by the Sept 11th attacks, the various combined crashes resulted in the S&P 500 falling by about 50% from its peak to the bottom, but it was already back up to the peak value in 2007, then the global financial crisis hit.
This bubble is much bigger. Some analysts say the AI bubble is 17x the size of the Dot Com bubble, and 4x the size of the 2007/08 real estate bubble. AI stocks were 40% of all US GDP growth in 2025, and 80% of all growth in US stocks.
Nvidia’s stock price has gone up 1700% in just 2 years. OpenAI is planning to go public on a valuation of $1 trillion despite losing vast amounts of money. Just 7 US tech companies make up 36% of the entire US stock market, and they’re all heavily betting on AI.
At least when the dot com bubble popped, it left some useful things behind, like huge amounts of dark fibre. But, the AI processors are so specialized they can’t be used for much of anything else. They also wear out, sometimes within months. The datacenter buildings themselves can maybe be repurposed to being general purpose datacenters, but, a lot of the contents will have to be thrown out.
Have you seen any comparisons to the previous AI bubbles and winters?
AFAIK none of the previous AI bubbles really had much investment. There was hype, but it was hype within the computer science, or cognitive science fields. But, maybe there’s a financial bubble bit that I’m missing.
I don’t know about how they compare in scale, but corpos were spending billions on business AI solutions, and there were specialised technologies that died when the bubble burst.
Which bubble was that?