Bulls deny that there’s a 1990s-style bubble in AI. There are a few striking similarities, and some notable differences.
Is it karma? Coincidence? Either way, the ghost of the dot-com bubble is back 25 years later.
Shares in Cisco Systems CSCO -1.85%decrease; red down pointing triangle, the dot-com-era champion that became the world’s most valuable company at its peak in March 2000, this week reached that level again for the first time. It’s a cautionary tale of how far stock prices can depart from reality.
Bulls spend a lot of time denying that there’s a 1990s-style bubble inflating again in artificial intelligence. But it’s worth going through a few of the striking similarities, and some notable differences.
Valuation
There are lots of ways of valuing stocks, and pretty much all of them make U.S. shares look the most expensive since the dot-com bubble. The forward price-to-earnings ratio, price to cash flow, the “Fed model” calculation of the extra reward offered by stocks compared with bonds and the cyclically adjusted PE ratio all scream that stocks are expensive.
An investigation by The Times found the administration’s change in enforcement benefited the industry, including companies that had ties to the president.
A cryptocurrency firm run by the billionaire Winklevoss twins was facing a punishing federal lawsuit. After Donald J. Trump returned to the White House, the Securities and Exchange Commission moved to freeze the case.
The S.E.C. had also sued Binance, the world’s largest crypto exchange, but then dropped the case altogether under the new administration.
And after a yearslong legal fight with Ripple Labs, the new S.E.C. tried to reduce a court-ordered penalty against the crypto firm, seeking to soften the blow of the punishment.
The agency’s pullback from these cases illustrated a wide-ranging transformation in the federal government’s treatment of the crypto industry during President Trump’s second term, a New York Times investigation has found.
It is unheard-of for the agency to retreat from a swath of lawsuits against a single industry. And yet, The Times found that the S.E.C. had eased up on more than 60 percent of the crypto cases that were ongoing when Mr. Trump returned to the White House, moving to pause litigation, lessen penalties or outright dismiss the cases.
The dismissals were particularly unusual, The Times found. Under Mr. Trump, S.E.C. dismissals came at a far higher rate for crypto firms than other cases.