The AI craze, investors look more at parallels with 2008 than 1999

Vitaliy Katsenelson, chief executive officer of Investment Management Associates, says: 

I wrote in the past that the AI rollout feels a lot like déjà vu of the 1999 telecom bubble. Today it is also starting to feel like the 1999 bubble is being supersized into something closer to what led to the 2008 financial crisis.

This is not a good change.

Comparisons with 1999 provided some perverse reassurance. Burst stock market bubbles are in many ways a price of technological innovation as investors balk at trying to price new inventions years into the future. 

They didn’t stop canals, railroads, cars, or the internet from remaking the economy, and a stock market selloff needn’t stop the growth of AI.

Now, investors are beginning to hear the rhyme with a different bubble — the 2008 collapse of a massive edifice of mortgage-backed credit that caused the Global Financial Crisis

Book extract: The Fearful Rise of Markets, Authers  

and the Great Recession. For houses then, read data centers now. This historical event generates alarm because credit bubbles can inflict far greater damage. 

Equity manias merely rob people of wealth that only ever existed on paper. 


Can the “hyperscalers” continue to finance their debts? The crucial financial indicators to watch are credit default swaps. The new parallel with 2008 also shows up in a belated concern with free cash flows. 

With cash cushions running out, it’s no wonder that hyperscalers are now expected to borrow more than $200 billion this year, up from $125 billion last year — or that investors are expressing their anxiety by selling stocks.

In another uncomfortable parallel with ’08, they have been able to borrow very cheaply, in large part because the Federal Reserve intervened to keep rates low for a decade after the GFC and again after the pandemic. 
That has changed. 
John Authers Bloomberg July 31, 2026  


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