AI Bubble Jitters: Investors Dust Off Dot-Com Playbook to Vet Soaring Tech Valuations

As valuations for Artificial Intelligence (AI) companies soar, investors are growing wary of a potential AI bubble. To navigate this risky market, many are deliberately applying lessons and strategies learned during the dot-com crash of the late 1990s and early 2000s.

The core of this “dot-com playbook” involves shifting focus from pure potential and hype to tangible financial metrics. Investors are prioritizing companies with clear paths to profitability, strong cash flow, and measurable business models—not just those with impressive AI technology. They are looking beyond the flashy front-end applications and seeking out the foundational layer.

Specifically, capital is being channeled into the “picks and shovels” of the AI boom. This means investing in companies that provide essential infrastructure, like semiconductor manufacturers and firms supplying large-scale computing power and cloud services. These companies provide real, predictable revenue streams regardless of which specific AI startup ultimately succeeds. This strategy is a defensive move aimed at capturing value without bearing the full risk of an over-inflated tech sector.