The AI bubble is looking worse than the dot-com bubble. Here’s why.

Two different bubbles and two completely different revenue streams mean only one thing

By Jeffrey Funk and Gary Smith (reprinted from MarketWatch with permission)

What will happen when the AI bubble bursts?

It’s different this time. How many times have we heard that? It usually turns out to be wishful thinking. This time, the generative-AI bubble may really be different than the dot-com bubble — just not in a good way.

The number of generative AI users is growing faster than the number of internet users in the late 1990s — except the comparison is essentially meaningless.

Think about it. What did people have to do to become internet users in the late 1990s? They had to buy a computer and subscribe to an internet service provider, which were both expensive. The Compaq ProSignia Desktop 330 was $2,699 in 1999 ($5,101 in 2024 dollars) and that didn’t include applications software such as Microsoft’s MSFT Word, Excel and PowerPoint. Bell Atlantic offered a digital subscriber line service for $59.95 a month in 1999, or $113 in 2024 dollars.

               The use of essentially free services — like social media, email, messaging, 
               and other apps — doesn’t mean they are particularly useful.