Stock market shows signs of trouble from AI rally

The stock market is showing signs of trouble, causing concerns reminiscent of the dot-com bubble that burst 25 years ago. This time, the technology causing excitement is artificial intelligence. The S&P 500 had a significant rally, rising 72% from its low in October 2022, adding over $22 trillion in market value. But now, stocks are starting to fall, with the Nasdaq 100 down more than 10%, indicating a correction. Similarities to the past are concerning. The dot-com bubble saw an explosion in tech investment, leading to inflated stock prices, followed by a major crash. On March 24, 2000, the S&P 500 reached a record high that it would not achieve again until 2007. Just days later, the Nasdaq 100 also peaked, but it took over 15 years to recover. While the recent boom in AI has been remarkable, some experts believe it is not as extreme as the dot-com era. Vinod Khosla, a notable investor, pointed out the shift from fear to greed among investors, potentially leading to overvalued stocks. Steve Case, former CEO of AOL, noted that the transformative nature of the internet created high stakes in investment, where those who hesitated often missed out. The future remains uncertain as investors grapple with the risks and possibilities of AI technology.