I received many interesting messages and feedback on my article about the AI bubble last week. Some agreed, others disagreed, but many questioned the moral behind my opinion. That’s why I decided to focus this week’s article on why I compare the AI bubble to the infamous dot-com bubble that bust more than 20 years ago.
Back in the late ’90s, the internet promised to revolutionise countless industries. As a result, everyone wanted to jump on the bandwagon. Ambitious individuals dreamed of becoming internet entrepreneurs and companies raced to establish an online presence. Investors, eager not to miss out, poured money into startups that were expected to grow their investments into millions, if not billions, of dollars. The stock markets soared to new heights.
But by 2000, reality struck. Many entrepreneurs took advantage of the internet hype, selling visions with little practical value. When the truth emerged, the dot-com bubble bust. In just two years, trillions of dollars in market value were wiped out. Most startups that had been built on lofty promises collapsed. A few, like Amazon and Google, survived and thrived, but many, like Yahoo, AltaVista, GeoCities and others faded into history. Some entrepreneurs cashed out successfully, while many others went bankrupt and lost their jobs. All of it started with bold promises of revolutionising industries with the internet.
Fast forward to today and I see the same thing happening with AI. Everyone, once again, is trying to join the bandwagon, from creating, demonstrating, or pitching AI as the ultimate tool to transform industries. Do I believe AI will have a real impact? Absolutely. But at the same time, I see familiar patterns that once defined the dot-com bubble.
Back then, many dot-com startups promised to revolutionise industries but had little to show in practice. Today, countless AI initiatives make bold claims without delivering practical results. In the ’90s, internet companies raised hundreds of billions of dollars while generating little or no revenue. Today, many AI startups have unclear paths to profitability yet attract massive investment. During the dot-com era, investor enthusiasm was sky-high, only to evaporate when the crash came. Now, AI attracts the same level of attention and no one can say when the correction might arrive. Finally, dot-com startups often looked alike, with only minor differences separating them. AI is no different too as most solutions look and function almost the same, with only small enhancements setting them apart. Déjà vu, isn’t it?
To conclude, let me emphasise that I firmly believe AI will transform industries just as the internet already has. But patterns suggest that an AI bubble bust may be around the corner, especially given the sheer volume of AI apps and solutions being introduced almost daily. Both the internet two decades ago and AI today represent transformative technologies. Yet in both cases, enthusiasm has run far ahead of actual progress. Time will eventually separate reality from hype. Until then, keep your eyes wide open for opportunities and your hard-earned money safe for the real deal. Let’s catch up again next week as we explore reality from fiction and productivity from waste.
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