The AI frenzy exhibits similarities to the dot-com mania, but there is one significant and hazardous difference. According to Professor Erik Gordon, the number of investors involved in internet startups during the dot-com era was considerably smaller compared to the current investor landscape within Big Tech. While companies like Nvidia are large and profitable now, if they were to crash, the consequences would be far-reaching. The AI boom shares resemblances with the dot-com bubble, but one expert highlights a crucial difference that makes this craze more perilous. The high valuations of companies such as Nvidia reflect investors' enthusiasm for artificial intelligence, as they believe it will revolutionize productivity, generate groundbreaking products and services, and profoundly transform the global economy. A similar scenario played out in the late 1990s and early 2000s when people became infatuated with the internet's potential to reshape every aspect of their lives. Just as the internet was a revolutionary force, AI will be too, as Professor Erik Gordon from the University of Michigan's Ross School of Business explains. However, Gordon cautions that even though both themes are accurate, it does not mean that companies with valuations based on these themes were or are good investments. Many dot-com companies that drove the internet revolution ended up bankrupt.

Similarly, many AI companies driving an equivalent magnitude of change are likely to go bankrupt or experience significant declines in value. In other words, even if AI turns out to be the next big thing, the valuations of AI companies may still be disproportionate, and pioneers in the field might still face failures. Nvidia is one of the major beneficiaries of this frenzy. The company's revenues surged by 126%, reaching around $61 billion in the last financial year, resulting in a nearly 600% increase in net income to approximately $30 billion. Investors hungry for growth have driven Nvidia's stock price up six-fold since the end of 2022, boosting its market value from below $400 billion to approximately $2. 2 trillion. Professor Gordon, an expert in entrepreneurship and various aspects of financial markets and technology, emphasizes a significant difference between the dot-com and AI frenzies. While the pioneers of the internet were mostly small startups, the leaders in the AI field include established and profitable giants like Microsoft and Alphabet. According to Gordon, these established companies can sustain losses in the billions without going bankrupt. However, the downside is that while dot-com startups had limited shareholder bases, so only daring or foolish investors were affected by their failures, the dominance of Big Tech names in the AI industry represents a substantial portion of the US stock market's value and is a cornerstone of pension funds and retirement portfolios. Therefore, if AI losses drive down the stock prices of these tech giants, a large number of investors will suffer. Gordon has previously drawn a distinction between the dot-com bubble and the tech-stock boom, stating that the current situation is not a bubble of fake companies but rather an overvaluation bubble of a much larger magnitude.