Paul Krugman says the AI boom is like the dot-com bubble, but may not have ended with a massive crash. The Nobel Prize-winning economist said the tech stars are already dominant and involved in politics. Relief of high-tech bro. ”
Paul Krugman says Ai Frenzy has an internet fanatic tint, but it may not end in a catastrophic crash.
Krugman, the winner of the Nobel Prize in Economic Sciences, said this week in the Subsack Post that the difficult evaluation of some technology stocks and the massive excitement of the future reminded him of the internet fad.
Still, he wrote, “AI Fever has a lot of similarities to the dot-com bubble, but Endgame might be completely different.”
Former MIT and Professor Princeton highlighted the two important differences. One, in his view, Dot-Com’s vibrancy partly contributing to investors’ hopes that startups that benefit from a major network effect like Microsoft will become “very profitable semi-monopoly.” This means that it is reflected in. However, the planet of the AI Revolution is a grand seven, a group that already fits the bill very well.
“I don’t know if people realize how extraordinary this is,” Krugman said. “Historically, major new technologies have tended to disrupt existing market tiers. This time, investors are hoping that new, radical technologies will actually strengthen that tier.”
Krugman, who resigned as a New York Times columnist in December nearly 25 years later, questioned whether he would make incumbent tech Titans more profitable if AI is already dominant.
He said they might generate less income, especially if they need to pour money into AI to protect their position.
Another big difference is that Silicon Valley largely divorced from politics a quarter of a century ago, Krugman said, but now big tech bosses like Jeff Bezos and Mark Zuckerberg are It has close ties with the government.
Krugman has skyrocketed more than 12 times since its launch in 2020, with Tesla stock valuing the company 12 times or 12 times north of its annual revenues, saying “Eron Musk is obvious, if any. It only makes sense in points.” Role as a co-president. ”
Veteran economists said these differences could lead to different outcomes than this technology Bonanza. He pointed to President Donald Trump’s proposal to build a strategic cryptocurrency reserve and support $500 billion in private investment in AI infrastructure. He said both programs can direct money into technology as investors sell coins to the government and AI companies benefit from federal support.
“This bubble could end up with a massive tech bro bailout, not pop,” Krugman said.
Numerous investors, economists and market gurus have drawn similarities between the AI boom and the dot-com bubble.
However, since the release of ChatGPT sparked the outbreak in late 2022, the Tech Heavy Nasdaq 100 has skyrocketed over 80%, with many expecting the stock market to rise this year.
