tech
AI chip bubble rivals French stocks in 1700s, surpasses Nasdaq during dot-com frenzy by one measure
Historical parallels for the artificial intelligence bubble are in no short supply.
TL;DR
- The SOX semiconductor index's peak price is 62% higher than its 200-day moving average, exceeding the spread seen before the 1987 Black Monday and 1929 Black Tuesday crashes.
- This spread is comparable to the Nasdaq's 55% lead-in to the 2000 dot-com crash and within the range of the French CAC All Tradable index prior to the 1720 Mississippi Bubble.
- Some economists, like Ann Pettifor, view the substantial cash being amassed for AI investment as indicative of a bubble.
- Other commentators, such as Robin Wigglesworth, downplay the scale of the AI build-out compared to historical booms like the 1860s railway boom.
- Authors like Derek Thompson suggest that transformative technologies, even if they experience a bubble and correction, ultimately transform society, citing AI as a likely continuation of this pattern.
- AI revenues are materializing, with Alphabet, Amazon AWS, and Microsoft reporting significant cloud revenue growth.
- Market gains are increasingly concentrated in semiconductors and AI infrastructure stocks, indicating a potential lack of broad market leadership.