"This time is different."
Yes, it actually is.
Despite the recent dip, financial markets are at historic highs.
They are dominated by the technology sector, which brings some people to compare the current situation with the Dotcom bubble of 25 years ago.
Maybe they're right, but...
It's not the first time a single industry dominates the market and it doesn't always end in a bubble.
In 1900 rail was the dominant industry, even more than technology today.
That was justified by the revolution of train transportation around the world.
Just 15 years ago the technology sector represented the same share of global market capitalisation as the financial sector, around 6%.
Now it's around 19%, a massive increase!
But considering AI is just getting started, I'd say this is just the beginning!
AI is indeed a revolution, and a very quick one. It's changing our daily lives as we speak.
In fact, today's AI-driven tech leaders are fundamentally stronger than the darlings of the Dotcom era.
For example, NVIDIA has today a net income margin of 49% vs 17% and 15% of Cisco and Oracle respectively in 1999.
Five out of the magnificent seven have a net margin over 20%, which is generally considered very high. Plus, their net income growth rate is still amazing.
Also, Dotcom companies' valuation was crazy high when compared to today's stocks.
In March 2000, Cisco had a price/earning ratio of 196.2, vs "just" 36.6 of NVIDIA today.
I believe we're just at the beginning of American tech dominance, thanks to AI.
PS
The New York Times already called for a tech bubble in 2014!
