Apollo Chief Economist Warns of 'Artificial Intelligence Bubble Bigger Than the 1990s Dotcom Bubble'

The chief economist at asset manager Apollo (with assets under management of 640 billion euros in 2024), Torsten Sløk, warned in an article dated July 16 that the “artificial intelligence ( AI ) bubble of today is bigger” than the “dotcom bubble of the 1990s”.

In a short article, Torsten Sløk considers that the difference between the dotcom bubble of the 1990s, which ended up 'bursting' in 2000, and the current artificial intelligence bubble is that the 10 largest companies in the North American stock index S&P 500 “are more overvalued today” than in the 1990s (see graph).

The top 10 of the S&P 500 is made up of Nvidia (with a weight in the index of 7.3%), followed by Microsoft (6.6%), Apple (5.5%), Amazon (4.3%), Meta (3.1%), Broadcom (2.3%), Alphabet (class A and C shares with 2.1% and 1.9%), Berkshire Hathaway (1.8%), Tesla (1.7%).

Major S&P 500 companies have reported significant investments in artificial intelligence. Nvidia announced in April of this year that it plans to build AI servers worth over $500 billion (€426.2 billion) in the United States over the next four years, with the help of partners like TSMC.

Microsoft plans to invest $80 billion (€68.2 billion) in AI-enabled data centers in fiscal 2025, as well as in the implementation of artificial intelligence and cloud-based applications. Apple in February committed to investing more than $500 billion (€426.2 billion) in the United States over the next four years, including a new factory in Texas, doubling its North American advanced manufacturing fund, a manufacturing academy, and accelerating investments in AI and silicon engineering.

Amazon has investment plans for 2025 of $100 billion (€85.2 billion), including in artificial intelligence. This includes $10 billion (€8.5 billion) in its South Carolina factory for its AI infrastructure.

Meta is also investing in this area. This year, the company already announced its intention to allocate "billions of dollars (in US terms)" by 2025 to build AI data centers to develop superintelligence.

Broadcom, meanwhile, would be one of the beneficiaries of AI intelligence, given its chip manufacturing operations, a component that's part of the value chain for this type of technology. Alphabet, Google's owner, is planning an investment of $85 billion (€72.4 billion) this year, a sum that will also be used to accommodate demand for the technology company's artificial intelligence solutions. In July, the company announced $25 billion (€21.3 billion) for data centers and artificial intelligence infrastructure.