Nasdaq100: It is ok to compare AI-mania to the dot-com bubble

The Nasdaq100, the leader among US indices in recent years, remains one step ahead even during periods of decline. The index has been declining for the sixth consecutive trading session, but careful profit-taking on Tuesday became more nervous with a 1.4% drop, and the total decline from the peak exceeds 2.4%.

Market commentators note a decline in euphoria surrounding the revolutionary nature of AI implementation and compare the situation to the dot-com bubble. The problem is indeed very similar, from the revolutionary nature of the technology and the desire of market leaders to show their involvement in it, to the overvaluation of companies based on projections of rapid early success into the future. An example is the launch of GPT-5, which attracted criticism and complaints about quality rather than the expected breakthrough, forcing OpenAI to roll back to the previous model in some cases. And all this despite multi-billion dollar investments.

While comparisons with events and market impacts from a quarter of a century ago make sense, it is also important to remember that talk of a dot-com bubble began as early as 1996–1997 and was very loud in 1999. However, the most intense part of the rally was still ahead, with more than 120% growth from August 1999 to March 2000. This is a crucial point for investors: Is it really time to open a global short position?

We believe that the recent market sluggishness is related to a change in expectations regarding US monetary policy following alarming inflation reports: higher rates are a heavier burden for fast-growing companies that need money for investment.

In addition, August is statistically the second-worst month for stocks, second only to September, which is likely holding back buyers.

At the same time, we continue to believe that the Fed remains in a cycle of rate cuts, having taken a long pause of three quarters. The April correction removed the market's long-term overheating, creating room for growth. This means that the market's tactic of buying on dips and taking profits with shallow corrections is more likely to be replaced by a resumption of growth than to turn into a global sell-off.