The AI boom faces a looming bust, potentially leading to larger financial losses than the dot-com crash, according to Erik Gordon, a business professor. AI infrastructure startup CoreWeave has seen its stock plummet, illustrating that investors may face greater pain than those during the dot-com era. Gordon highlighted the stark contrast between CoreWeave's recent market performance and the historic collapse of Pets.com, indicating that the financial fallout from a stalled AI boom could be significantly more extensive and painful for investors.
Gordon noted that CoreWeave's stock plunge reflects a potential for greater investor losses in the AI sector than during the dot-com crash, stating, "more investors will suffer than suffered in the dot-com crash, and their suffering will be more painful" in a bursting AI bubble.
Gordon emphasized that the current AI boom is an "order-of-magnitude overvaluation bubble" with financial repercussions that may far exceed those of the Pets.com collapse.
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