In an interview, valuation professor Aswath Damodaran compares the current AI-driven market boom with the dot-com boom of the late 1990s. He argues that the two cycles differ in key fundamentals, particularly around capital expenditure. Damodaran says the dot-com boom and bust did not involve “huge capital expenditure” during that period, and when the downturn arrived, shareholders experienced large declines in value. He describes losses that range from roughly 60% to 90% depending on the company, adding that the damage was largely borne by shareholders. The discussion frames the dot-com experience as a period where investors’ wealth was sharply reduced during the bust, without the same level of heavy capital spending that could indicate a different kind of underlying investment cycle. The interview does not provide specific new metrics on AI companies’ valuation, but it emphasizes the contrast in how capital spending and where the financial losses fall shape investor outcomes across different market eras.
Damodaran says AI boom differs from dot-com era in capital spending and investor losses
In an interview, valuation professor Aswath Damodaran compares the current AI-driven market boom with the dot-com boom of the late 1990s. He argues that the two cycles differ in key fundamentals, part...
- Aswath Damodaran compares today’s AI boom with the dot-com boom of the late 1990s.
- He says the dot-com cycle involved little “huge capital expenditure.”
- He describes dot-com bust losses for shareholders in the range of about 60% to 90%.
- Damodaran says the losses in the dot-com bust were largely restricted to shareholders.
"The dot-com boom and bust had no huge capital expenditure in that cycle," Damodaran said. "When the bust came, shareholders lost 60%, 70%, 80% or 90% of their money. The loss was restricted to the shareholders."
1 day ago"The dot-com boom and bust had no huge capital expenditure in that cycle," Damodaran said. "When the bust came, shareholders lost 60%, 70%, 80% or 90% of their money. The loss was restricted to the...
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