Ai Hype and Dot-Com Bubble: History Repeats
History repeats.
NVIDIA is leading the Ai boom of the 2020s, while Cisco was the champion of the internet infrastructure race in the late 1990s.
The fate of Cisco and its peers is well known. Will it happen the same to the Ai industry?
The Economist has compared the proliferation of Ai apps to the invention of tractors, while the Financial Times likens it to the early days of the internet.
Both tractors and the internet took a long time to replace their predecessors and establish themselves as labor and economic revolutions.
The Dot Com bubble didn't halt the internet; quite the contrary. However, it took at least another decade for today's tech giants to emerge, many of which didn't even exist in 2000.
Same could happen to the Ai industry and its champions.
Today, chips are king. But they quickly become commodities.
Modern chips, currently in high demand, will become cheaper and in large supply in maybe a couple of years, potentially threatening Nvidia's revenue.
The shortages experienced in 2021 and 2022 were promptly fixed, resulting in overcapacity.
Among others, Samsung Semiconductor had to decrease production last year due to a growing chip surplus, while its Japanese counterpart, KIOXIA Group, reported a record loss of $1.7 bn. Meanwhile, global silicon wafer shipments fell 14.3% last year.
Oversupply, fuelled by too much cash too soon, was also at hearth of the Telecom crush in 2000-2002.
High valuations and hype don’t always (almost never) reflect the reality of an industry!
