> ## Content Index > Fetch the complete content index at: https://fomo.observer/llms.txt > Use this file to discover other available public pages before exploring further. # ALEJANDRO JIMENEZ: You’re wrong about the Dot-Com crash, so stop saying AI-driven stocks will be a tragic repeat - URL: https://fomo.observer/alejandro-jimenez-youre-wrong-about-the-dot-com-crash-so-stop-saying-ai-driven-stocks-will-be-a-tragic-repeat/ - Published: 2026-08-27T05:45:11.000Z - Updated: 2026-08-27T05:45:11.000Z - Author: Fomo.Observer - Tags: Dispatches, AI The financial press and “enlightened” social media influencers keep warning that today’s AI-driven stock market is a bubble ready to burst, comparable to the dot-com implosion in 2000\. They’ve warned us for years, yet the market keeps rising. Frustrated with the constant gloomy predictions, I’ll share some perspective, as someone who lived the dot-com era. ![](https://storage.ghost.io/c/08/7f/087f88ab-cb17-44cc-928d-9cfca14a3fb9/content/images/2026/08/data-src-image-9601835a-a08a-4421-8ff9-2512c86dfc6d.png) *If anything, the internet's eventual scale and impact were severely underhyped during the dot-com euphoria.* You may wonder why I’m writing about stocks on a startup site. Today’s largest stock market companies were startups once, some not that long ago. I hope today’s brightest Estonian startups get to IPO too. **Why the constant comparisons between today’s AI euphoria and the dot-com era?** The world’s largest companies today are predominantly in tech. Microsoft, Amazon, Alphabet and Meta are all valued in the trillions. Nvidia, the most valuable, is worth over $5 trillion. Astronomical numbers compared to a decade ago when no US company had reached the trillion mark. This decade’s rise in valuations has largely been driven since the launch of OpenAI’s ChatGPT in 2022 on the expectation that AI will revolutionise the way we live and work. Tech companies are generating huge profits from the AI transformation through chip production, cloud services, data centre buildouts, etc. Big tech companies are projected to invest $1.1 trillion next year, mainly in AI infrastructure. That’s an enormous 3.4% of US GDP or 22x the entire GDP of Estonia! ![](https://storage.ghost.io/c/08/7f/087f88ab-cb17-44cc-928d-9cfca14a3fb9/content/images/2026/08/data-src-image-90b8a4d2-04d0-40ef-9f1d-d2394ebace27.png) Anthropic and OpenAI, the main AI labs, might IPO already this year. Chatter is that Anthropic could fetch a $2 trillion valuation, making it the highest-valued IPO in history. Concerns are brewing that the tech sector’s growth increasingly depends on the AI labs’ hyper-spending, some of which is financed by the same tech companies collecting the revenues, like Alphabet and Nvidia, creating a complex, interdependent chain. Moreover, rising valuations have pushed the tech sector’s concentration in the S&P 500 to 37%, a historic high for the main US stock index. The dot-com era was similarly about tech. A time when the internet was new. There was tremendous optimism on its potential, but also confusion on what to do with it. The dot-com period’s birth is widely considered August 1995, when Netscape IPO’d. Netscape launched the first mass-market internet browser. As households began getting personal computers and dial-up connections, investors poured billions into virtually any company having a ".com" address. Traditional investing rules were thrown out. Companies were IPO’ing after just a few months of existence — often with no profits, no proven business model and sometimes no real product. Valuations skyrocketed on flimsy metrics like “eyeballs,” with the hope that web traffic would eventually lead to profits. The euphoria was fleeting, and many went bankrupt by the dot-com end in October 2002, the stock market’s lowest point of that era. **However, was the dot-com era really that bad?** The Nasdaq index, which represented the dot-coms given its heavy weighting in tech stocks, appreciated roughly 400% from the dot-com start to its March 2000 peak. It then collapsed nearly 80%, bottoming in October 2002\. It then took roughly 13 years to recover to its 2000 peak. Zooming out with the benefit of hindsight, the dot-com era made a fool of both pessimists and optimists. It felt horrible to miss the boom years of the ‘90s just as much as to suffer the implosion of the ‘00s. Losing 80% is painful. However, the probability that anyone bought the Nasdaq exactly at the top and sold at the bottom is extremely low. Just like it’s nearly impossible for anyone to perfectly buy at the bottom and sell at the top. Most investors invest consistently over the years, riding the ups and downs. The 2002 bottom retraced the Nasdaq to its 1996 levels. Therefore, those who had invested by 1996, perhaps didn’t lose money. **By the time the bubble was done, it still hadn’t paid to go against the internet** Between the start of 1995 and the end of 2002, the Nasdaq delivered a respectable annual return of +7%. Some of today’s most valuable companies IPO’d during that time. Nvidia and Amazon are good examples. **Fun fact:* $10k invested in Nvidia’s IPO would be worth $85 million today. It IPO’d in 1999 at the heart of the mania. Not bad.* Missing long-term trends can be far more painful than enduring drawdowns. In the ‘90s, I read a *Fortune* magazine article about the internet’s potential. It predicted the emergence of e-commerce, but not much else. We had no clue how the internet would change the world. It eventually disrupted all industries from travel to advertising to finance to healthcare. Social media radically changed how humans interact. If anything, the internet was underhyped versus what it ultimately achieved. No investment boom in history has seen capital expenditures perfectly match future demand. Railroads in the 1800s, electricity at the turn of the 20th century, the internet in the 1990s and shale oil in the 2010s. All had winners and losers. All had company bankruptcies, but industries that endured. **How comparable is it this time?** Like the dot-com period, AI will have winners and losers. Expect overinvestment and high-profile bankruptcies. However, the publicly traded tech companies leading today’s stock market are cash-making machines, unlike many of the dot-com dogs. At the start of this year, big tech companies held roughly $600 billion in cash, their highest combined amount ever. Their net profits are growing astronomically at 67%, and profit margins are at historical highs. Big tech companies fund most of their AI spending with internal cash flow. Some are increasing borrowing, but their debt levels are close to zero relative to operating profits. Therefore, even if the AI euphoria bursts after severe over-investment, large tech companies will generally have the financial strength to recover. Stock prices and profits could fall, but it won’t be the end of big tech or AI. It surely won’t be the end of the stock market. The soaring stock market is actually the cheapest it’s been in three years, validated by rising profits. The S&P’s price-to-earnings multiple is at 19.6x vs the last high of 23x, despite the strong rise in valuations. When profits grow faster than the stock market’s appreciation, the market’s multiple gets cheaper. The stock market declines by 14% on average at some point every year, but 3/4 of the time it quickly recovers and ends the year positively. Next time a decline happens (and it will), it doesn’t automatically mean a bubble has burst. Sometimes the market is just catching its breath. Don’t confuse common intra-year falls with a severe crisis, as the media often does. ChatGPT launched four years ago. Commentators have been warning of an AI stock bubble burst since then. The Nasdaq and S&P 500 have doubled in value over that period. If you listened to these “experts”, you painfully missed the gains. As time passes, even a dot-com crash can look like a blip on a graph. I began investing in 1999, at the peak of the mania. 27 years have flown by. I’m grateful to have stayed invested. ![](https://storage.ghost.io/c/08/7f/087f88ab-cb17-44cc-928d-9cfca14a3fb9/content/images/2026/08/data-src-image-fd32b6c1-340a-4cdd-829e-4eb6e407c3bc.png) \---------------- *Alejandro Jimenez is Founding Partner of TriHeritage Global Capital, an Estonia-based firm providing loans to scaleups and small companies. Previously, Alejandro was a partner in New York and Geneva at J.P. Morgan, the world’s largest financial institution. He also ran the energy trading desk at Enefit and managed sustainable investment portfolios at Grünfin.* Disclaimer: This message is for informational purposes only and is not intended as advice or recommendation for any financial product, service, strategy or other purpose. Past performance does not guarantee future results.