Is Amnesty International is the new point bubble or something completely different?

If you are investing in the late nineties, you will remember euphoria Dot-Com Boom. Anything with “.com” at the end of his name can raise millions in capital and see the price of a double or triple stock overnight.

Investors believe that the Internet will change everything – which he did in the end. But between 2000 and 2002, this dream turned into a nightmare when the Nasdaq Stock Exchange lost approximately 80 % of its value, as it eliminated trillion dollars in wealth.

Today, with artificial intelligence Driving newspaper headlines and enthusiasm of the investor, many people wonder if we were about to experience another bust?

Similar to the late 1990s

There are some similarities that cannot be denied between the two periods. At that time, Internet companies that have more than just a business plan and a web site were estimated at astronomical levels. Today, artificial intelligence feels the new internet – a transformative technology promising to provide health care industries to financing to entertainment. The narration is strong, and the capital rushes. Recently, Palantir is a preferred stock for fans at the present time, it is traded with PE from 522!

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Another similarity is the market concentration. In 1999, CISCO, Intel, Sun Microsystems and AOL stickers were children in the mutation. Fast forward to this day, and the so-called “wonderful 7”-apples, MicrosoftAlphabet, Amazon, Meta, Tesla and NVIDIA – constitute more than 30 % of the entire S&P 500.

To put it in the right quorum, the S&P 500 is supposed to be a variety of American companies. But if a few arrows lead most revenues, this creates real risks if these companies stumble. The market value of the best 10 S&P shares is approximately 40 % of the entire S&P 500 index.

The differences that concern

While the echoes of the Dot-Com era are high, the differences are higher.

First, the assessments extend but they are almost not ridiculous like 1999. At that time, the price ratio (P/E) of the S&P 500 was over 25 years old-the eye repetition number at the time. Many Internet shares had no profits at all, making traditional evaluation measures meaningless.

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Today, the P/E is hovering forward from the S&P 500, about 21 years old. This is high compared to the long-term average of 15-16, but anywhere near the Dot-Com area. More importantly, the technology giants that dominate today’s index are very profitable companies that generate a tremendous cash flow. The only area in which we see Dot-Com stylists appear in artificial intelligence stocks. Slide two messages of artificial intelligence beside the stocks, which is the madness of feeding for investors.

Second, the companies that lead these fees are not speculative companies with undesirable business models. appleMicrosoft and Alphabet trillion dollars with fortress budgets and contracts of consistent profitability. Nvidia – The Crown Jewe of the Ai Trade – sells real products with an unusual demand. Unlike Pets.com, Webvan.com and etoys (remember them), these companies have sustainable revenue flows and permanent competitive benefits.

Is artificial intelligence the new point?

There is no doubt that artificial intelligence is anxious. Just as investors believe in the late 1990s that all business will turn online, many now believe that artificial intelligence will reshape every corner of the economy. Some of this optimism is justified.

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The Internet has changed the way we live in our lives today. Artificial intelligence has the ability to enhance productivity, reduce costs and create completely new industries. But in the short term, the markets always exaggerate the speed of adoption and artificial intelligence companies start very quickly so that many must fail.

This is the place where the danger lies: not in whether artificial intelligence will change the world, but how quickly Investors believe it will happen. History tells us that transformational techniques often pass noise cycles. We have now thought that people will not write checks, but 50 % of Americans have been written at least one check in the past 12 months. There will be two winners, but there will also be a lot of losers along the way.

Why is this not 2000

Despite the noise, I do not think we are heading to repeated Dot-Com. Here why:

• The power of profits: The largest companies in S&P 500 are cash generation machines. Apple alone makes more than $ 100 billion in free cash flow annually. This is far from the point that burns money in the past.
• The strongest public budgets: American companies are more healthy today. Many leading companies have low debts of huge cash reserves. In 2000, the public budget was much weaker.
• Organization and maturity: The financial system is more prepared. The lessons of the Dot-Com bust and the 2008 crisis formed the most cautious capital markets.

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Will there be volatility? definitely. some AI -driven stocks It is priced for perfection and will be corrected when the reality is not less than expectations. But wholesale collapse in the market, as we saw from 2000 to 2002, is unlikely.

It may be the best comparison to be the railway mutation in the nineteenth century. The railway has turned the economy, and many companies failed along the way. But the infrastructure they created in America more than a century ago. Artificial intelligence may follow the same path-chapter in the early years, but ultimately change the world.

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