Latest news with #dotcomcrash
Yahoo
3 days ago
- Business
- Yahoo
Tech guru Erik Gordon says investors will 'suffer' far more from the AI boom than the dot-com crash
The AI boom will go bust and dwarf the dot-com crash because of its greater scale, Erik Gordon said. AI startups such as CoreWeave threaten greater investor losses than the likes of he said. The business professor has previously warned that AI is an "order-of-magnitude overvaluation bubble." A company's stock plunge shows how the financial fallout of the AI boom stalling will be much greater than the dot-com bust, tech guru Erik Gordon told Business Insider. Gordon, an entrepreneurship professor who researches financial markets and technology at the University of Michigan's Ross School of Business, has previously called the AI boom an "order-of-magnitude overvaluation bubble." Some investors have said tech stocks surging on AI bullishness will crash like dot-com companies in the early 2000s, but others, such as Kevin O'Leary, have dismissed the comparison. Gordon contrasted the market values of the online pet-supplies retailer that became what he called the "poster bozo" of dot-com mania, and CoreWeave, an AI infrastructure startup that went public in March. Nvidia-backed CoreWeave's shares have fallen 33% over the last two days, wiping about $24 billion from its market cap, showing how "more investors will suffer than suffered in the dot-com crash, and their suffering will be more painful" in a bursting AI bubble, Gordon said. The fall came after the company's latest earnings showed widening losses and infrastructure constraints. backed by Amazon and several renowned VC firms, secured a market value of $410 million at its peak in February 2000. But within the next 12 months, the company declared bankruptcy and said it would liquidate its assets, and its stock was delisted. "If you assume all $410 million was lost, the loss was tiny compared to what we might see in AI," Gordon said. CoreWeave shows how sudden and significant losses can be for shareholders, Gordon said. The loss to its market cap is almost 60 times peak market cap. CoreWeave stock still closed at around $100 a share on Thursday, more than double its listing price of $40. "It takes a hype-driven tech stock to instantly destroy $20 billion in wealth," Gordon said. CoreWeave didn't immediately respond to a request for comment from Business Insider. CEO Michael Intrator said in a statement accompanying the earnings that they showed "continued momentum across every dimension of our business." The collapse of the dot-com bubble saw the S&P, including dividends, drop by around 9% in 2000, 12% in 2001, then 22% in 2002. Scores of startups filed for bankruptcy, and thousands of tech workers lost their jobs. Tech titans make up a large chunk of the US stock market's value, and their profits and market dominance have made them mainstays of retirement portfolios and pension funds. In 2022, Gordon told Business Insider that more people were invested in AI than in dot-com companies 25 years ago. He predicted there would be "more bowls of spaghetti" after the AI boom burst, as people who got burned by the slump would cook at home to save money and cut costs wherever possible. Speaking to Business Insider last week, O'Leary said the AI boom wasn't the "same hype that the internet bubble was, because today, you actually can see the productivity and measure it on a dollar-by-dollar basis." Read the original article on Business Insider
Yahoo
04-08-2025
- Business
- Yahoo
A New Investor Asks If The Dot-Com Bubble Or 2008 Crash Felt 'Like The End Of The World.' Veterans Reflect On The Panic And The Lessons
A Reddit user who began investing during the COVID-19 pandemic wanted to know what it really felt like to live through the dot-com crash and the 2008 financial crisis. 'Did it feel like the end of the world?' they asked in the r/stocks subreddit recently. Hundreds of experienced investors responded with stories, lessons, and memories that painted a sobering picture of financial chaos, emotional upheaval, and resilience. Everything Was Going Up, Until It Wasn't One of the most upvoted replies came from someone who lived through both crashes. 'Got killed as a relatively new investor during the dot-com bubble,' they wrote. 'Learned my lesson and kept buying [index exchange-traded funds] on the dips during the 2008 financial crisis, which turned out to be some of my best investments ever.' Don't Miss: Accredited Investors: Grab Pre-IPO Shares of the AI Company Powering Hasbro, Sephora & MGM— 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. You can Many described the late '90s as euphoric. 'Dot-com bubble was surreal. Everyone was talking about stocks. You'd be going home on the subway and people were talking about what they wanted to invest in,' one commenter recalled. But when the bubble burst, it hit hard. 'I lost $10k during the dot-com crash, which hurt really bad as a 23-year-old,' another said. In contrast, the 2008 crash felt different for some investors. '2008 was horrific,' one wrote. 'I thought the world was ending.' Others said it wasn't just about numbers on a screen. 'People lost their houses, people killed themselves.' Lessons In Panic And Patience Several investors noted they made their best financial moves by holding steady. 'I was scared because I had just bought a house, but I kept investing into my 401(k), and it turned out to be a very good move,' one said. Another shared, 'All fun and games until you lose your job, then sell stocks at the bottom, then lose your house.' Some remembered cashing out early, only to miss the rebound. Others stayed the course. 'Never sold! I only invest in stock index funds. Stick with a diversified portfolio and enjoy the magic of compounding,' one long-time investor advised. Trending: $100k+ in investable assets? – no cost, no obligation. One user who lost more than 75% of their portfolio in 2008 said it took eight years to fully recover. 'Kept to my plan,' they said. 'Now have over $6.5M.' 'Remember 2008 like it was yesterday. Family's home was appraised at $176K and sold at sheriff's sale for $38K,' another added. One commenter said they had to rent out rooms and work multiple jobs just to keep their home. 'Had to hustle. It was a rough time.' The Calm Before The Crash What struck several people was how confident everyone felt before the fall. 'Pizza delivery drivers were buying real estate with zero down,' one recalled. 'Anyone buying a property would buy a second one for income or to flip and pay for the first one.'The thread also drew comparisons to the current artificial intelligence boom. 'Never felt like the world was ending for any of these crashes. The potential impending AI bubble worries me more than either of these did. It has a more existential, end-of-the-world-as-we-know-it vibe,' someone warned. People were buying anything with '.com' in the name in 1999, and the same is happening now with AI. While some called today's fears over tariffs and inflation 'a blip' compared to 2008, others urged caution. 'This isn't going to end well,' one wrote. The mood may not always signal a crash, but as one investor summed it up: 'It's not really the end of the world, but it can be the end of your world.' Read Next: Can you guess how many retire with a $5,000,000 nest egg? .UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article A New Investor Asks If The Dot-Com Bubble Or 2008 Crash Felt 'Like The End Of The World.' Veterans Reflect On The Panic And The Lessons originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
