Investing In The Age Of AI: Lessons From The Dot-Com Era

Forbes

25-04-2025

Thomas H. Ruggie, ChFC®, CFP®, Founder & CEO, Destiny Family Office.
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Remember the '90s, when every incoming email triggered its own cheery alert and mailboxes overflowed with free CD-ROMs from AOL? In those innocent days, we were only starting to understand how transformative the internet would be. Then, almost overnight, the conversation changed. People who barely knew what a website was were suddenly investing in any company with 'dot-com' in its name. Tech stocks soared—and soon enough, the bubble burst.
Today, the rise of AI is giving me a feeling of deja vu all over again. We're still early in the cycle, but AI is quickly moving from relative obscurity toward total ubiquity. And just like in the era of grunge music and dial-up connections, investors are being flooded with bold claims and skyrocketing valuations—as well as very familiar financial risks.
In the mid-to-late 1990s, internet stocks exploded. At the peak, you had dot-com startups spending nearly $44 million on Super Bowl ads in 2000. Popular mutual funds focused exclusively on internet companies returned triple-digit profits. Even as a younger financial advisor at the time, I still had enough intuition to sense that we were in a bubble. Luckily, we started proactively pulling clients out of those positions before the crash.
As they say, history doesn't repeat, but it often rhymes. And right now, the rhyme is loud and clear. We're right on the brink of mass AI adoption. Two years ago, hardly anyone could tell you what an LLM even was. By the end of this year, I predict most people will be using one on a regular basis, whether they know it or not.
Like the internet in its early days, I still don't think we fully grasp just how deeply AI will impact our work, our lives and the global economy. But we're already seeing profound shifts in key industries, and this will only increase. Traditional transportation service models are facing disruption from automated car services. Manufacturing competitiveness hinges more and more on the adoption of robotics and intelligent systems. Marketing has already started shifting from SEO-based strategies to AI-optimized content discovery, and customer service is becoming more automated by the day.
Over the next 24 to 30 months, I expect a boom cycle that will ultimately lead to a bubble. Greed will creep in. Investors will chase the AI hype. And inevitably, the bubble will pop. That's not based on pessimism, but experience.
For investors, this moment presents both a rare opportunity and a significant risk. Early adopters and infrastructure providers—semiconductors, cloud infrastructure, power grids—are the ones most likely to benefit. This is the modern equivalent of selling picks and shovels during a gold rush.
If you're not in a position to invest in private AI companies, many of which are still inaccessible to everyday investors, there are still opportunities. The 'Magnificent Seven'—Apple, Amazon, Google, Microsoft, NVIDIA, Meta and Tesla—are already deeply entrenched in the AI space. Diversification is also essential. My strategy involves building a basket of five to 10 public AI-focused companies to spread exposure.
At the same time, I can't emphasize enough the importance of taking profits. You don't want to be the last one out of the room when the music stops. I always tell clients to take some chips off the table before it's too late. Nobody wants to miss out, but being early is always better than being late, even if it means missing the peak.
We've been here before. And we know how this story goes. That's what makes the AI era so exciting—and dangerous—for investors. Those who diversify smartly, focus on infrastructure, avoid the hype and take profits along the way will come out ahead. The key is knowing when to lean in and when to take a step back.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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