Investors have been swamped with headlines comparing today’s market, particularly the artificial intelligence (AI) trade, to dot-com days. “Big Short” investor Michael Burry has also joined the “AI bubble” chorus, launching his Substack after deregistering Scion Asset Management. While comparing Nvidia’s (NVDA) price action over the last three years to that of Cisco (CSCO) in the late 1990s has been a pastime for many, the latest comparison has come in terms of dividend yield, with the S&P 500 Index’s ($SPX) dividend yield falling to lows last seen during the dot-com days.
To be sure, such comparisons are not totally out of place, and the frenzy toward AI is comparable to what we saw toward internet companies in the late 90s. There, however, is little denying that AI looks set to redefine numerous industries, just as the internet did. Another reality is that while the internet turned out to be perhaps bigger than what most thought, many companies of the dot-com era either went out of business or, as in the case of Intel (INTC) and Cisco, still trade below their all-time highs.
