The value of many technology companies has increased during the AI fever, causing many people to worry that something similar to the dotcom bubble will happen.
In November 2022, ChatGPT was launched and opened the artificial AI fever around the world. In April 2023, OpenAI - the company that owns ChatGPT - was valued at 29 billion USD. By February, the company's value increased to 80 billion USD, an increase of nearly three times in less than 10 months. According to data tracking company CB Insights, OpenAI is one of the most valuable technology startups in the world, after ByteDance - which owns TikTok, and SpaceX.
Meanwhile, xAI, Elon Musk's startup founded in July 2023, has been valued at $24 billion in less than a year. CNN commented that the expectation that AI can revolutionize human life makes investors attracted and pour huge sums of money into AI companies.
That's not all. The brightest star in the AI fever is Nvidia when the company's GPU models are sought after to build AI training systems.
At the end of May 2023, Nvidia became the first chip manufacturer in the world to reach a capitalization value of 1,000 billion USD. In the middle of last month, they continued to reach the 3.3 trillion USD mark, sometimes surpassing Apple and Microsoft to become the most valuable company in the world.
However, despite being the top valuable company, Nvidia is not on the list of the 100 most famous and iconic global brands in 2023 announced by Interbrand. This makes many people skeptical about the sustainability of the brand.
According to Reuters, the excitement about AI is being compared to the dotcom bubble more than two decades ago. At that time, stocks of dotcom companies increased rapidly on Wall Street in the late 1990s as the Internet became more widely popular. Speculative investing drove the Nasdaq Composite index (a concentration of technology stocks) up 400% from 1995 to 2000. However, by October 2002, the index was down 80% from its post-bubble peak. dotcom fizzled in 1999.
Meanwhile, Nvidia's value increased 4,300% in the past 5 years compared to Cisco - one of the "four horsemen" that increased 4,500% in value in 5 years and peaked in 2000.
"No one knows exactly what will happen with AI. There is no certainty about the future winners," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
However, there are also opinions that AI and dotcom have similarities, but the value of the companies is being evaluated more moderately. Capital Economics analysts note the current rally is largely driven by a solid earnings outlook. This is a sign that fundamentals still play a big role in company valuations.
"We believe that the dotcom bubble will not return until the valuation of companies has not reached the maximum limit as in the 2000s," Reuters quoted analysts at Capital Economics.