AI Boom: A New Dot-Com Cycle of Circular Investment

If history rhymes, the AI boom is humming the tune of the dot-com bubble — this time with trillion-dollar tempo. Money is flooding into artificial intelligence from every direction, but much of it is circulating inside the same closed loop:

Big Tech funds AI startups → those startups buy cloud compute and chips from Big Tech → investors reward Big Tech for AI growth → valuations rise → more capital pours in.

It’s a self-reinforcing system that inflates faster than real-world value can catch up. The parallels with the late-1990s are striking: massive capital chasing “inevitable” technological change, record valuations unbacked by profits, and a public market dazzled by buzzwords.

Then, it was dot-coms promising to “change everything.” Now, it’s AI promising to “transform everything.”

The difference is scale. The dot-com bubble was measured in billions; the AI race is measured in trillions — from hyperscale data centers to chip supply chains^[1]. Giants like Nvidia, Microsoft, and Amazon are both financiers and beneficiaries of the same boom they’re fueling.

The risk isn’t that AI will fail — it won’t — but that its financial ecosystem is folding in on itself. When growth feeds on investment rather than adoption, the loop inevitably breaks. The last time we saw this dynamic, it ended in a crash that erased two-thirds of the NASDAQ^[2]. Today, the numbers — and the feedback loops — are even larger, and the investor euphoria around AI carries a familiar echo of the dot-com bubble — a signal worth heeding.