Since the start of 2025, the stock market has been experiencing unexpected swings reminiscent of the 2000 dot-com bubble. Major indices like the S&P 500 and Nasdaq 100 are rapidly declining, raising investor concerns.
Major Index Decline
In early March 2025, major stock indices such as the S&P 500 and Nasdaq 100 faced a drop of over 10%. The decline in the stocks of the 'Magnificent 7' became particularly noticeable, sparking discussions on Wall Street and references to a new dot-com crisis. This fall, however, is not just due to economic instability but also because of a surge in investments in the artificial intelligence sector, reminiscent of events 25 years ago.
AI Echoes Dot-Com Scenario
The AI market continues to attract massive investments from companies like Alphabet, Amazon, Meta, and Microsoft. These giants are set to invest around $300 billion in artificial intelligence development in 2025. However, unlike the dot-com era, where many companies operated without a sustainable business model, current investments are directed towards firms with strong financial performance. Experts like Vinod Khosla warn that the market has shifted from fear to greed, a characteristic of the dot-com bubble.
Lessons from the Past and Current Status
When analyzing the current situation, many analysts recall the events of 2000: massive investments in 'bubble' companies, unjustified valuations, and market collapse. MIT economist Daron Acemoglu points out that although the current AI boom looks different on paper, the market structure remains the same. The dot-com era's tragedy demonstrated how significant technological breakthroughs can turn into failures due to poor timing and high-risk investments.
History repeats itself, and the current events in the AI market show parallels to the dot-com bubble. While innovations can change the world, investors should be cautious to avoid past mistakes.
