Billionaire Ken Fisher says the current AI boom cycle has three basic, surface-level similarities with the dot-com bubble and nothing else.
In a new video update, the Fisher Investments founder says that while the similarities between the two tech cycles exist, the underlying financial structure is starkly different.
“I understand why a lot of people who are wrong think they’re similar. Why? Two basic reasons. Valuations are high, one. And two, it’s tech-led. Oh, I guess there’s a third. They both have expectations about good things that this technology will deliver ahead, as the 1990s did for the internet, and as AI does today.”
Fisher highlights that today’s AI boom is clearly not a bubble, despite talks of overvaluation.
“Well, the dot-com bubble was a bubble, and I wrote about that bubble. The dot-com bubble had hundreds of companies that were losing money, that had no gross operating profit margin, that were dependent entirely on their survival being based on future cash raises through stock offerings…
Most of what goes on in AI today is huge companies with huge gross operating profit margins that are funding their AI efforts out of their huge growing profitability, profits in hand, their own cash flow, not based on selling stock.”
According to the billionaire, stocks rising and falling are just part and parcel of a healthy market.
“None of that’s about a bubble. That’s just normal stuff. We’ve had bear markets forever without having had bubbles. We’ve had categories of stocks fall forever without having had bubbles. It is a mistake to confuse the normal process that Sir John Templeton famously called the evolution of a bull market, of a bull market being born on pessimism, growing on skepticism, maturing on optimism, and dying on euphoria. It’s a mistake to confuse optimism and euphoria.”
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