"The AI boom is far more robust than the dot-com bubble, but there's still a risk it disappoints investors and sends shockwaves through markets and the economy, Liz Ann Sonders says. Charles Schwab's chief investment strategist told Business Insider that "extreme enthusiasm" about innovation and circular deals between tech companies reminded her of the internet bubble 25 years ago. But she said a key difference is that many dot-com companies were small and loss-making,"
"The Wall Street veteran said there's a danger that AI companies fail to deliver on their bullish growth forecasts, which have driven the stock market to record highs. "That's the ultimate risk - that you've set the expectations bar too high," she said. In that situation, even a slight miss could trigger market behavior that's a "little more egregious," she added."
The AI boom shows stronger fundamentals than the dot‑com bubble, with many leading firms being large, profitable, and growing revenues rapidly. Extreme enthusiasm and circular corporate deals echo prior internet‑bubble dynamics and foster speculative pockets in meme stocks, drones, and quantum computing. Nvidia reached a $5 trillion market capitalization backed by substantial quarterly revenue and net income. Heavy concentration of investor wealth in Big Tech raises equity exposure for the broader economy. If AI companies fail to meet lofty growth forecasts, investor disappointment could prompt market declines that reduce consumer spending and curb economic growth.
Read at Business Insider
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