Parallels Between AI Mania and the Dot-Com Bubble; Nasdaq double, Nasdaq bubble?

A few striking similarities, and some notable differences.

The race to build data centers is extreme, with investment figures in the trillions thrown around by leading AI developers. Spending is so large that economists say it’s making up a significant share of gross domestic product growth.

Companies that sell the equivalent of picks and shovels to the gold rush have done extremely well. Individuals are dominating stock trading, again betting big on tiny loss-making companies

Ultimately, whether this is a bubble depends on whether it pops.

If it turns out AI can’t deliver both the promised productivity gains and fat profits for its creators, the parallel will be to the painful dot-com aftermath, not the boom.

James Mackintosh WSJ Dec. 13, 2025

https://www.wsj.com/finance/stocks/the-eerie-parallels-between-ai-mania-and-the-dot-com-bubble-f99be6fe

Sällan har investerare varit besatta av ett ämne så till synes banalt som den korrekta avskrivningsplanen för anläggningstillgångar

Michael Burry, den berömda investeringsförvaltaren som spelades av Christian Bale i filmen "The Big Short" från 2015, hällde nyligen olja på elden.

https://englundmacro.blogspot.com/2025/12/sallan-har-investerare-varit-besatta-av.html

Artificial intelligence mania - Overvaluation, over-ownership, over-investment and over-leverage

 If the stock market drops on a given day, retail investors impulsively buy the next day. 

Their favourites are clear: on the Robinhood platform, the five most heavily owned stocks are all in the Magnificent Seven. And with $7.5tn still sitting in money market mutual funds, small US investors may have buying power left.

Because financial conditions remain so loose, liquidity keeps driving up stocks. That is almost forcing institutional investors to keep buying, including many who are sceptical of AI euphoria. 

The result is a strange new animal: the fully invested bear.  

Ruchir Sharma FT 15 December 2025

https://www.ft.com/content/ff72f64b-fc58-4f11-9b75-e30f99031936

Nasdaq double, Nasdaq bubble?

The queasiness about the AI trade involves its uses, the enormous cost of developing it, and whether consumers ultimately will pay for the services. 

Those answers will have major implications for the stock market’s future.

“The credit people are smarter than the equity people, or at least they’re worried about the right thing — getting their money back,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.

Rising depreciation expenses from the data center binge is a major worry. Alphabet, Microsoft and Meta combined for about $10 billion in depreciation costs in the final quarter of 2023. The figure rose to nearly $22 billion in the quarter that just ended in September. And it’s expected to be about $30 billion by this time next year.

Rational Exuberance. While Big Tech’s valuations are high, they’re nowhere near excessive compared to past periods of market euphoria.

Palantir Technologies trades at a multiple of more than 180 times estimated profits.  Snowflake with a multiple of almost 140 times projected earnings. But Nvidia, Alphabet and Microsoft are all below 30 times, which is relatively tame considering all the euphoria surrounding them.

Bloomberg 14 December 2025

https://www.bloomberg.com/news/articles/2025-12-14/wall-street-sees-an-ai-bubble-forming-and-is-gaming-what-pops-it

If you happen to be on a Texas highway sometime this summer, and see a 50,000-pound semi truck barreling along with nobody behind the wheel, just remember: A self-driving truck is less likely to kill someone than one driven by a human.

At least that’s what Chris Urmson, chief executive of autonomous-vehicle software maker Aurora Innovation, insists.

“You go to a court, and a judge makes a decision, and you don’t have any way to see the way her brain worked to get to that decision,” 

“But you can build an AI system that is auditable, and shows its work, and shows the parties how it made the decisions it made.”

WSJ Dec. 12, 2025

https://www.wsj.com/tech/ai/ai-decision-making-algorithm-audit-trust-5efdec1c