Silicon Valley once again stands in the middle of a massive technology cycle. A wave of artificial intelligence (AI) reminiscent of the dot-com bubble of the 1990s is continuing, but an analysis said the outcome is likely to be different this time because of several structural differences. The dot-com frenzy then gave birth to corporations like Amazon and Google, but after the 2000 collapse, more than $5 trillion (about 6,900 trillion won) in corporate value vanished and unemployment jumped, leaving a shock across the U.S. economy.
According to the New York Times (NYT) on the 9th (local time), the current AI boom looks similar on the surface but has a completely different core. The biggest difference is that the AI industry is a "bottom-up boom" lifted by the capital and talent of corporations that already have multi-trillion-dollar valuations, such as Microsoft, Google and Meta. Startups in the dot-com era competed with little funding, and the internet itself was an early platform that needed time to grow. By contrast, current AI investment does not cannibalize existing businesses, and corporations are pouring tens of billions of dollars into data centers and model development while maintaining stable cash flows.
The regulatory environment has also changed markedly. The Trump administration is easing regulations and prioritizing AI promotion as policy. That contrasts with the Clinton administration in the 1990s, which checked technology corporations by filing an antitrust suit against Microsoft. Unlike then, there are virtually no institutional barriers blocking the spread of AI.
The market size is likewise beyond comparison. During the dot-com boom, the peak corporate valuations of Cisco, Microsoft and Intel were about $500 billion (about 690 trillion won). Today, Nvidia's corporate value has surpassed $4.5 trillion (about 6,210 trillion won), and including Amazon, Google, Meta and OpenAI, the total for a single industry group exceeds the entire U.S. stock market size in 2000. Federal Reserve (Fed) Chair Jerome Powell said, "AI corporations have clear business models and revenue structures," calling it a different dimension from the dot-com era.
The nature of the technology itself also makes a difference. The internet gained value as the network expanded but needed time to grow because early users were very few. AI boosts productivity immediately upon release and translates into corporations' sales. In fact, AI trading corporations estimate an adoption speed 15 to 60 times faster than the internet's. Venture investor Ben Horowitz said, "AI products are providing immediate value sufficient to quickly replace existing products."
There are, of course, warning signs. Some say tangled investments and equity structures among AI corporations evoke the overheating of the dot-com era. JPMorgan analyzed that "capital is chasing AI corporations rather than AI pulling in capital," warning that some valuations are excessive. There were also cautions that funds could run out before AI products actually work.
Even so, the prevailing view in Silicon Valley is that this cycle is fundamentally different. Horowitz said, "The most obvious signal that it isn't a bubble yet is when everyone is talking about a bubble," and forecast that "even if the value of some corporations is adjusted, the AI industry as a whole will keep growing."