Bubble? What Bubble? News Bubble, Financial Bubble, Social Media Bubble?

August 5, 2025

We knew the AI hype was extreme. Now one economist offers a relatable benchmark to describe just how extreme it is. TechSpot reports, “The AI Boom is More Overhyped than the 1990s Dot-Com Bubble, Says Top Economist.” Writer Daniel Sims reveals:

“As tech giants pour more money into AI, some warn that a bubble may be forming. Drawing comparisons to the dot-com crash that wiped out trillions at the turn of the millennium, analysts caution that today’s market has become too reliant on still-unproven AI investments. Torsten Slok, chief economist at Apollo Global Management, recently argued that the stock market currently overvalues a handful of tech giants – including Nvidia and Microsoft – even more than it overvalued early internet companies on the eve of the 2000 dot-com crash. The warning suggests history could soon repeat itself, with the buzzword ‘dot-com’ replaced by ‘AI.’”

Paint us unsurprised. We are reminded:

“In the late 1990s, numerous companies attracted venture capital in hopes of profiting from the internet’s growing popularity, and the stock market vastly overvalued the sector before solid revenue could materialize. When returns failed to meet expectations, the bubble burst, wiping out countless startups. Slok says the stock market’s expectations are even more unrealistic today, with 12-month forward price-to-earnings ratios now exceeding the peak of the dot-com bubble.”

See the write-up for more about price-to-earnings ratios and their relationship to bubbles, complete with a handy bar chart. Sims notes the top 10 firms’ ratios far exceed the rest of the index, illustrating their wildly unrealistic expectations. Slok’s observations echo concerns raised by others, including Baidu CEO Robin Li. Last October, Li predicted only one percent of AI firms will survive the bubble’s burst. Will those top 10 firms be among them? On the plus side, Li expects a more realistic and stable market will follow. We are sure the failed 99 percent will take comfort in that.

Cynthia Murrell, August 5, 2025

Written by Stephen E. Arnold · Filed Under Business strategy, Financial, News

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Stephen E. Arnold monitors search, content processing, text mining and related topics from his high-tech nerve center in rural Kentucky. He tries to winnow the goose feathers from the giblets. He works with colleagues worldwide to make this Web log useful to those who want to go "beyond search". Contact him at sa [at] arnoldit.com. His Web site with additional information about search is arnoldit.com.