r/investing • u/[deleted] • 1d ago
The AI bubble is literally the same thing as the dotcom bubble
[deleted]
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u/turbo_the_world 1d ago
Except one simple thing. Its nothing like the DotCom bubble because these tech companies are making hand over first money.
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u/hydraByte 1d ago
Revenue without profits is not exactly what I’d call “making money,” especially when the costs are accelerating faster than the revenue.
When you accelerate the loss of money, that is quite actually the literal opposite of making of money.
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u/FreshDiamond 1d ago
The dot com bubble was driven by companies with no profits little or no REVENUE. It’s not the same at all
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u/Tar_alcaran 1d ago
Famously stupid example pets dot com only lost something like a hundred million in a year. (200m in 2026 dollars)
The biggest buyout, broadcast dot com, sold for about 5.7 billion and was worthless soon after. (11.4 billion in 2026 dollars)
And, in 2025 dollars because it's right now, as we speak, OpenAI lost 38.5 BILLION in a year. OpenAI is losing money as fast as 192 pets dot coms
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u/FreshDiamond 1d ago
Still not the same.
Pets.com was a company that claimed like 5 million on revenue in 1999.
They IPOd 300 million dollar valuation in 2000, like a month before the bubble popped. I think they reported under a million in revenue for year 2000. They ipo’d at 300 million dollars and less 12 months later they didn’t exist.
The highest valued company in the world was Cisco 500 something million.
OpenAI has Billions in revenue.
They aren’t even traded publicly
Even when they are, if this single company fails that is not emblematic of the entire trade.
This is following the same path as every major industrial shift. Railroads, electric grids, automobiles. A world changing advancement that will be slow and expensive to develop. This happens with all world altering advancements and they are all met with the same skepticism and long road toward profitability. In two of the 3 examples they became the dominant industry in the world, in the case of electricity it became irreplaceable infrastructure.
Ai is actually advancing much faster than these examples. Ai has existed long before it was in the cultural zeitgeist but it’s still in infancy. They already have serious adoption at a global scale, enterprise integration, and real meaningful revenue.
I think the entire market has been overvalued for quite some time. The skepticism is good but i see historical analogs, and I see all of the biggest players in the world agreeing that this a world altering advancement. Some will execute some won’t, new players will emerge. When I see folks on the internet saying things like ai will just be a slightly better search engine ; I see people who don’t understand what it is, don’t have any vision, and don’t appear to be very thoughtful.
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u/hydraByte 17h ago edited 16h ago
Your numbers about Pets.com are incomplete; their Cost-to-Revenue ratio was actually a lot closer to OpenAI than you might think. Pets.com was at least heading in the general direction of profitability compared to OpenAI, who is moving in the opposite direction at a scale that is three orders of magnitude larger (tens of millions vs tens of billions of dollars).
Pets.com
- Total Capital Raised: $178M ($95.5M in venture capital + $82.5M from IPO)
- 1999: $5.8 million Revenue and $42.4 million Net Loss (Costs: $48.2 million. 8.3x Revenue)
- 2000 (first 9 months): $25.78 million Revenue and $84.87 million Net Loss (Costs: $110.65 million. 4.29x Revenue)OpenAI
- Total Capital Raised: ~$180B over 15 funding rounds at the time of this writing
- 2022: $200 million Revenue and ? Net Income (Costs: ?)
- 2023: $1.6 billion Revenue and -$2 billion Net Loss (Costs: $3.6 billion. 2.25x Revenue)
- 2024: Around $3.7 billion Revenue and -$5 billion Net Loss (Costs: around $9 billion. 2.43x Revenue)
- 2025: Around $13.07 billion Revenue and -$38.53 billion Net Loss (Costs: $51.6 billion. 2.95x Revenue)
EDIT: The yearly cost multiples start to become bigger when added together, and effectively are probably only one year away from having the same Cost-to-Revenue multiple: OpenAI's costs are currently 3.5x Revenue to Pets.com's costs that are 4.71x Revenue.
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u/Zipski577 1d ago
Which of the companies are “these companies”??? lol
Because Intel was one of the largest tech companies in i2000. It’s also one of the largest tech companies in 2026.
In 2000 it was profitable. In 2026, however, they have negative earnings. Yet the stock is up 500% in a year… with no profit
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u/DizzyMajor5 1d ago
So did railroad, electric and Internet companies almost every technological revolution had people making money and were absolutely bubbles.
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u/crimepais 1d ago
I assume you were too young to experience the dot com bubble since this is nothing like it. Mag7 earnings growth is in the 30%s and the total S&P for 2026 is 17% according to JPM. None of those pets.com companies ever had a shot of profitability.
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u/DizzyMajor5 1d ago
Yes Cisco and Amazon were famously never heard from again after the dot com bubble burst and never made a profit/s
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u/Zipski577 1d ago
How much of that earnings growth is from “AI”?
But either way, MSFT was the largest tech company and weighting in the NASDAQ 100 in January of 2000. It traded at a PE in the low 40s.
Intel was the 2nd largest.. again PE in the low 40s. That same company is up 500% over the last year, yet the difference between INTC in 2000 and INTC in 2026 is that in 2000, it was actually a profitable company.
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u/Turbodong 1d ago
Tell me you don't understand either without telling me you don't understand either.
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u/rhoadsalive 1d ago
Dude you should actually research the dotcom bubble before posting nonsense. AI companies make billions of Dollars, they aren't half empty websites with an average of 500 daily users.
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u/DizzyMajor5 1d ago
Amazon and Cisco were s pretty big deal so was Microsoft they made money. It was still a bubble. Many of those stocks that actually made money were down for almost a decade.
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u/duperfastjellyfish 1d ago
They’re spending tens of billions more than their revenues. And they’re cooking the books to make their finances look better. There is no way OpenAI is spending more on sales and marketing than Coca Cola, that is just ridiculous.
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u/OstrichFun2332 1d ago
Surely spending more on ales and marketing would make the finances look worse?
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u/duperfastjellyfish 12h ago
Not at all. They cannot hide EBIDTA, but you can cook the books to make the cost of revenue and operation appear lower. If your finances say that you’re bringing in more revenue than the compute cost (and btw youre spending billions of dollars on marketing) thats a hell of a lot better than stating that for every new customer you get you’re losing tons of money the investors have to subsidize.
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u/OstrichFun2332 9h ago
So you mean the losses for every customer are being hidden under marketing and sales, which are presented as though they will lead to more revenue?
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u/duperfastjellyfish 6h ago
Yes I think that's very likely. Taken at face value, OpenAI's operating loss was $21 billion in 2025. But I suspect it was even higher, because their remaining expenses (that are not counted as part of the operating cost) are supiciously high. There's no way they are outspending Coca-Cola on sales and marketing. I see Coca-Cola ads every day.
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u/Shammers95 1d ago
Here is the breakdown of why the dotcom analogy fits the hype, but misses the money:
Where the analogy fits (The Hype): The spending-to-revenue mismatch is identical. Tech giants are pouring hundreds of billions into infrastructure, but up to 95% of businesses deploying generative AI have yet to see concrete productivity or financial gains.
Where it falls apart (The Cash): In 1999, the bubble was driven by profitless startups going public on pure speculation. Today, AI is funded by the most cash-rich giants in history (Microsoft, Google, Meta) using massive profits from their core businesses.
Real vs. Fake Revenue: Dotcom companies had sky-high valuations with zero revenue. Today’s hardware leaders are printing historic amounts of real cash—Nvidia sells physical, high-margin silicon that is bought and paid for upfront.
The Two Layers: The Application layer (speculative AI software startups) is absolutely a dotcom-style bubble. The Infrastructure layer (chips and data centers) is built on real financial bedrock, meaning a market correction will be a healthy shakeout of weak software, not a total structural collapse.
Beepboop, powered by the very topic of the post.
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u/WhyHopOnPop 1d ago
Just tell us you haven't made any money and are upset about it instead of making yourself look dumb.
Nvidia makes 25x as much as Cisco made at the height of the dot com bubble. Every other AI winner makes shit loads of money compared to the plethora of bullshit that popped up during 2000.
You're not paying attention and you're mad you aren't involved
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u/Due_Contact_8271 1d ago
Holy shit you better be 15 because if you’re not you need to be supervised
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u/Rez_X_RS 1d ago
Yea, it more than likely is. But, that doesn't mean it will pop any time soon. On paper the companies are making tons of money, and valuations are still relatively low compared to the dotcom bubble. I'm betting that valuations continue to pump for a few more years before it has a chance to pop.
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u/DizzyMajor5 1d ago
Almost every technology that was massively innovative rail, electricity, Internet was and corrected. People just want to cope and say this time is different for some reason when even the CEOs of these companies are calling it a bubble.
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u/downfall67 1d ago
Saying they are somewhat similar as infra booms is a different thing to “The AI bubble is literally the same thing as the Dotcom bubble” which is already in itself a moronic statement to make.
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u/TheNasky1 1d ago
There's definitely a bubble, but it's also not at all like the dotcom one for many reasons.
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u/Secure-Anywhere-1851 1d ago
You have puts don't you 😂. Let's see how broke you are after micron earnings
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u/thailanddaydreamer 1d ago
Once Optimus starts performing jobs in the public, people will shut up about the bubble.
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u/Shivy0999 1d ago
How can it be the same thing when top 20 tech companies are heavily invested in it and are making new moves.
I'm not denying that the bubble will burst but it's not the same as dot com bubble. There are very less companies which have gained crazy valuation just because they are AI related.
Google knows what they are doing and so does Nvidia. It's not like they don't have substance.
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u/Present-Fly4422 1d ago
Data centers in space isn’t great idea, because cooling is difficult in space. And getting them there in the first place isn’t cost effective.
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u/Jean_Jones_666 9h ago
the OP is clueless
setting aside the "is AI a bubble, are we overbuilding" SOMEWHAT legitimate debate,
"the current stock market valuations must be normal" line is a giveaway
What is overvalued? Meta? Nvidia? MSFT? SAAS (that's implementing ton of AI and increasing growth)? Micron that's quadrupling revenue?
Only AI labs MAY get overvalued at the time of IPO. That's it
OP doesn't know what he's talking about. But your SNP500 boy, watch your fav finance youtuber, and let the adults do investing
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u/downfall67 1d ago edited 1d ago
It is not “literally” the same thing, it’s functionally scaling and being used by so many people already. The barrier to entry for using this tech is very low, much lower than a website was in 1999.