AI Mania Triggers Dot-Com Bubble Flashbacks
The dot-com bubble taught investors to be wary of stock-market rallies powered by a technological boom -- that is, until generative artificial intelligence sent tech stocks soaring this year.Shares of Nvidia, the graphics-chip maker at the heart of the frenzy, have nearly tripled in 2023, while the Nasdaq-100 has climbed 38% and the S&P 500 has gained 16%."There's a huge boom in AI -- some people are scrambling to get exposure at any cost, while others are sounding the alarm that this will end in tears," said Kai Wu, founder and chief investment officer of Sparkline Capital. "Investors can benefit from innovation-led growth, but must be wary of overpaying for it.". Investors are paying up for the shares, betting on a windfall down the line. Nvidia is trading at 41 times its sales from the last 12 months, according to FactSet, compared with 2.4 times sales for the S&P 500. On a forward basis, the stock trades at 20 times its expected sales for the year ahead -- double its average over t
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