Over the past two years, artificial intelligence has moved from a bold promise to a full-blown economic phenomenon, with soaring stock valuations, blockbuster IPOs, and record-breaking private fundraising. Big Tech leaders like Nvidia and Microsoft are breaking valuation records, while startups like Anthropic and OpenAI are raising billions and creating fortunes almost overnight.
The scale and speed of this wealth creation are unlike anything seen before, according to researchers, even compared with the dot-com boom of the 1990s.
Still, history’s lessons cast a long shadow.
Many analysts argue that the AI sector’s current leaders are far more profitable and established than most dot-com companies ever were, echoing the heady days before the 2000 crash.
At the same time, the wealth is highly concentrated in Silicon Valley and, for now, largely illiquid, locked in private companies that can delay public listings thanks to abundant venture capital and secondary share markets.
Why It Matters: The AI boom is quickly concentrating wealth and influencing financial markets worldwide. Whether it delivers lasting economic change or ends in a painful correction will affect not only investors but also innovation, jobs, and global competitiveness.
- Unprecedented Wealth Creation: The AI sector now includes nearly 500 unicorns valued at over $2.7 trillion, with 100 of them founded since 2023. These companies have produced dozens of new billionaires in just months, fueled by mega-rounds of funding for firms like Anthropic, Safe Superintelligence, and Anysphere. This surge has made AI the fastest wealth generator in over a century.
- IPO Fireworks Reminiscent of 1999: Recent public offerings, such as design software company Figma’s, have seen prices more than double or even triple in a single day of trading. These kinds of first-day leaps recall the peak of the dot-com bubble, when companies could soar on hype alone, although some AI IPO prices have cooled afterward.
- Valuation Warning Signs: While analysts at Goldman Sachs say AI leaders’ high prices are supported by real profits, examples like Palantir trading at 600 times earnings suggest pockets of extreme investor optimism. If earnings growth slows, these lofty valuations could prove hard to sustain.
- Silicon Valley’s Dominance Grows: The Bay Area now has more billionaires than New York, with AI wealth driving record home sales above $20 million and reversing fears of economic decline in San Francisco. This geographic concentration mirrors the dot-com era’s power centers and may further concentrate economic opportunity.
- Liquidity Still Limited: Unlike in the late 1990s, most AI fortunes are tied up in private equity stakes. Founders and early investors can sell shares in secondary markets or through acquisitions, but large-scale cash-outs will likely depend on future IPOs. Until then, much of this wealth exists mainly on paper.
Go Deeper -> Is the A.I. Boom Turning Into an A.I. Bubble? – The New Yorker
AI is creating new billionaires at a record pace – CNBC
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