Is the AI ​​stock boom a dot-com bubble? David Rosenberg, Jeremy Siegel and five other experts participate.

New York Stock Exchange Traders Chewing Gum

A trader works on the floor of the New York Stock Exchange December 4, 2014. REUTERS/Brendan McDermid

  • Pundits like David Rosenberg and analysts from Wall Street banks like Bank of America have compared the AI ​​stock boom to the dot-com bubble that burst in 2000.

  • At the same time, Wharton’s Jeremy Siegel and Wedbush Securities’ Dan Ives don’t believe that will be the case.

  • Here is a selection of the latest expert opinions on this year’s AI stock boom.

This year’s stunning rally in artificial intelligence-related stocks surprised even stock bulls, but its blistering pace and investor enthusiasm for AI invite some unflattering comparisons to the dot-com bubble of the late 1990s.

Market pundits, including veteran economist David Rosenberg and pundits from Wall Street names like Bank of America, UBS, and TAM Asset Management, have compared the rise of AI tech stocks to the boom in internet-related stocks in the late 20th century — which eventually became the The case ended with the stock market crash in 2000.

The tech-heavy Nasdaq 100 index is up 39% so far this year, mostly due to massive rallies in AI-related stocks like Nvidia, Alphabet, and Microsoft. Nvidia surged a staggering 192%, prompting some comments suggesting the stock may be overvalued.

But not everyone thinks the boom in AI stocks has gone too far. Wharton professor Jeremy Siegel said he doesn’t see the hype surrounding the sector as a bubble, and Tradier CEO Dan Raju told Insider that “the talk of an AI bust at this point is unfounded.”

Here’s a selection of the latest expert take on the rise in stocks related to artificial intelligence.

Michael Hartnett, Bank of America

Michael Hartnett, CIO of BofA Global Research, said AI is currently in a “baby bubble” and noted that “AI = Internet.”

Wealth bubbles, whether they’re in the “right things” like the internet or the “wrong things” like the real estate market, are always triggered by easy money and ended by Federal Reserve rate hikes, he said.

James Penny, TAM Asset Management

James Penny, the company’s CIO, said, “Companies that even mention the word AI in their earnings are seeing their share price rise,” and it “smacks very much of the dot-com era.”

“I think the market has made ends meet a little bit. I’d put the odds of it falling much higher from here,” he told Bloomberg.

Art Cashin, UBS

“I think AI is going to be a new mini version of dot-com,” UBS’s Art Cashin told CNBC. “Everything you hear is going to have an AI twist, from new medicines and drugs to predictive natures of all kinds. That’s going to be interesting.”

David Rosenberg, Rosenberg Research

“This kind of corporate behavior isn’t all that different from what happened in the dot-com bubble, where company after company satisfied investors’ appetites for news about how it plans to integrate the internet into its business — or boosted stocks.” , just because they added something.” “.com” is part of the name,” wrote veteran economist David Rosenberg.

Dan Ives, Wedbush Securities

Wedbush’s Dan Ives strongly disagrees that tech stocks are on the brink of a dot-com-like asset bubble or collapse based on their valuations. According to him, the industry is in for a “1995 moment,” similar to the boom that followed the advent of the Internet.

“With massive cost reductions across the technology sector over the past nine months, resilient corporate spending and a resilient consumer, we believe the stage is set for a ‘1995 moment’ as AI is the most transformative technology we’ve seen since the dawn of the internet .” Taking shape,” he wrote.

Jeremy Siegel, Wharton Finance Professor

Even retired finance professor Wharton sees no bubble in the AI ​​hype. During the dot-com era, there were “tremendous valuations of companies that didn’t make a profit,” he said.

Dan Raju, Tradier CEO

Dan Raju, CEO of the fintech and brokerage firm, said it’s wrong to compare AI adoption to the dot-com bubble.

“In 1999, company valuations and crazy price-to-earnings ratios were based on completely unproven theories of instantaneous insights from companies around the internet that never materialized,” he emailed Insider.

In contrast, “in 2023, we are realizing the benefits of AI “right here and now” in business. The introductory curve is still in its infancy, but the companies’ P/E ratios are still within the range of Grund.”

Read the original article on Business Insider

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