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'2000 Deja Vu': Fred Hickey says AI rally is no different than Dot-com bubble
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Published Jun 01, 2023 06:20
© Reuters.
Fred Hickey, a prominent investor and the editor of the newsletter “The High-Tech Strategist” which is published monthly for the past 34 years, argues that today’s market is resembling the 1999-2000 tech bubble.
He sees the ‘Big Seven’ – Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), NVIDIA (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA) – ending up as the Big Six – Cisco Systems (NASDAQ:CSCO), Intel (NASDAQ:INTC), Dell (NYSE:DELL), IBM (NYSE:IBM), Lucent, and Microsoft – did during the tech bubble.
“Substitute “dotcom” with AI – Artificial Intelligence - and 2023 appears to be a mirror image of what occurred twenty-three years ago,” Hickey said in the 425th edition of the High-Tech Strategist.
“Investor psychology never changes and neither do the outcomes of Superbubbles. All the stocks in the crowded trades (NTT, Nifty-Fifty, Big Six) ended up collapsing as investors panicked during the final capitulation phases of the bear markets. It’ll be no different with today’s Big Seven (Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla).”
“The only question is the timing of the downfall – and I suspect it’s coming soon,” he added.
The ongoing tech rally has been fueled by the success of Microsoft-based OpenAI’s ChatGPT. Hickey goes on to explain how IBM launched Watson AI in 2011 with the goal of revolutionizing the world.
He then reminds investors that Watson has been “a major failure and loss-leader for IBM for over a decade.”
“Ironically, most tech providers will be hurt by this shift in spending towards AI. Yet, the wildlings are pouring into other so-called AI beneficiaries, when the reality is otherwise,” Hickey concluded
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