The global race to dominate artificial intelligence is triggering one of the biggest technology investment waves in history, with companies spending trillions of dollars on data centres, advanced chips and computing infrastructure. But Aswath Damodaran, the NYU Stern professor widely known as the “Dean of Valuation”, has warned that a future AI correction could create risks far beyond what the market saw during the dot-com crash.
Damodaran believes the biggest difference between the late 1990s internet boom and today’s AI surge is not just the size of the investment, but how that investment is being financed. While the dot-com era was largely built around software ideas and internet businesses, today’s AI race involves massive physical infrastructure and billions of dollars in capital commitments.
What made the dot-com crash different?
During the internet boom of the late 1990s, companies rushed to build online businesses, websites and digital platforms. Many startups attracted huge valuations despite having limited revenue, but most of the spending was focused on software development, marketing and user growth.
