From Dot-Com Implosion to AI Explosion

Blodget Reflects on the Booms and Busts

Henry Blodget, the former Merrill Lynch analyst and now co-founder of Insider, revisits the parallels between the dot-com bubble of the early 2000s and today’s AI revolution. In a recent interview with Bloomberg, he highlighted how speculative fervor has returned, echoing the big swings seen during the internet’s first boom. While the fundamentals behind AI are stronger now than many of the questionable startups of the dot-com era, Blodget warns that excessive hype can still outpace real progress. Capital is again flowing freely, he says, reminiscent of times when everyone believed technology alone could rewrite the economy overnight.

The AI Moment May Be Bigger—And Riskier

While Blodget acknowledges AI’s transformative promise, he’s cautious about repeating historical mistakes. He draws a clear distinction between the operational tech gains of today and the overinflated expectations that plagued tech investors 25 years ago. AI companies are producing real results—productivity boosts, new tools, and consumer applications—which gives them more staying power. However, valuations and investor psychology still present risks, especially as companies scramble to associate themselves with AI regardless of substantial relevance or returns.

What’s Really Changed in a Quarter Century?

According to Blodget, today’s market—although technologically matured—is still driven by human psychology that hasn’t evolved much since the dot-com days. The investor mindset still swings between euphoria and panic, leading to rapid cycles of boom and bust. However, what has changed is the global scale and speed at which information travels, making hype build-ups swifter and their consequences more profound. In Blodget’s view, understanding these dynamics is as important as understanding the technology itself when navigating the AI era.