AI vs. Dot-Com Bubble
When drawing parallels between #AI and the dot-com bubble of the late 1990s, many express concerns that current valuations may be excessively inflated. However, significant differences are apparent.
To begin with, the current price-to-earnings (PE) ratio of the NASDAQ-100 is approximately 30, whereas during the dot-com bubble, it skyrocketed to 200, with many companies lacking any earnings in sight.
Additionally, the market capitalisation to #GDP ratio reached unprecedented levels in the late 1990s, while today's figures, although still high, are supported by robust earnings and solid cash flows from established business models.
Innovations in AI, cloud computing, and digital transformation have fuelled revenue growth, exemplified by #NVIDIA's data centre sales, which surged 409% year-over-year in Q4 2024, and Microsoft's Azure, which experienced a 28% year-over-year increase in 2024. This surge in productivity is being driven by individuals, businesses, and governments alike.
As a result, major tech firms are making substantial investments in AI research and development, with clear strategies for monetisation.
AI is poised to become a transformative force, akin to the transistor, a groundbreaking invention that scales effectively and permeates various sectors of the economy.
Lastly, the Federal Reserve raised interest #rates to 6.5% to tackle inflation after previously lowering them to address Y2K concerns before the bubble burst in 2000.
In contrast, current expectations suggest that interest rates will stabilise or decrease, which would support valuations.
When drawing parallels between #AI and the dot-com bubble of the late 1990s, many express concerns that current valuations may be excessively inflated. However, significant differences are apparent.
To begin with, the current price-to-earnings (PE) ratio of the NASDAQ-100 is approximately 30, whereas during the dot-com bubble, it skyrocketed to 200, with many companies lacking any earnings in sight.
Additionally, the market capitalisation to #GDP ratio reached unprecedented levels in the late 1990s, while today's figures, although still high, are supported by robust earnings and solid cash flows from established business models.
Innovations in AI, cloud computing, and digital transformation have fuelled revenue growth, exemplified by #NVIDIA's data centre sales, which surged 409% year-over-year in Q4 2024, and Microsoft's Azure, which experienced a 28% year-over-year increase in 2024. This surge in productivity is being driven by individuals, businesses, and governments alike.
As a result, major tech firms are making substantial investments in AI research and development, with clear strategies for monetisation.
AI is poised to become a transformative force, akin to the transistor, a groundbreaking invention that scales effectively and permeates various sectors of the economy.
Lastly, the Federal Reserve raised interest #rates to 6.5% to tackle inflation after previously lowering them to address Y2K concerns before the bubble burst in 2000.
In contrast, current expectations suggest that interest rates will stabilise or decrease, which would support valuations.
Trade attivo
#nasdaq#nq
#stocks
#tariffs
#trump
Trade chiuso: obiettivo raggiunto
Needs to rest and retest, most likely. #nasdaq
#nq
#stocks
#tariffs
#trump
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Declinazione di responsabilità
Le informazioni ed i contenuti pubblicati non costituiscono in alcun modo una sollecitazione ad investire o ad operare nei mercati finanziari. Non sono inoltre fornite o supportate da TradingView. Maggiori dettagli nelle Condizioni d'uso.