So the AI bubble is on everyone’s mind. I don’t have an answer on where that stands. However, I was around during the Internet bubble. In fact, I got out of my Wharton/Penn grad studies in mid-1999 to start my career in venture capital, and by March 2000, I was doing restructurings as co-investors in our deals exited the market or ran for the hills.

If you listen to CNBC at all, you will hear a recurring comparison about this market and how it compares to the Internet bubble. The rapid rise of artificial intelligence has been hailed as revolutionary, with many believing it will transform industries and daily life. We are currently experiencing an AI boom, marked by:

• Rapid investment
• Stock market surges
• Economic integration driven by the AI industry

Looking at history, we see that past bubbles offer important lessons about overinvestment and market corrections:

• The dot-com boom, which ultimately led to the dot com crash
• The housing crisis

As we speculate about the future, it’s clear that AI has the potential to reshape the economy and society in ways we are only beginning to imagine.

To say I have a point of view on this would be an overstatement; however, I do have a view on an overlooked difference in the capital markets related to venture-backed, high-growth companies that participated in each of these massive market valuation increases. Understanding these nuances gives some additional perspective about what’s going on and if a massive market correction this time will ever happen. Many wonder whether the current AI market will face a similar fate as past bubbles.

The key differences:

• The infrastructure that enabled thousands of speculative companies to reach public markets in 1999 no longer exists
• The boutique investment banks that took early-stage companies public were absorbed by larger institutions by 2000
• The venture capital market expanded dramatically, allowing companies to stay private three times longer