Investors turn to dotcom-era strategies to avoid risks from the AI bubble

The vibe in investing feels electric, with a side of jitters. Robots are stealing the show on the money scene, kicking off crazy parties and giving businesses a makeover. Nvidia, the brain builder for AI, is now like a superhero worth over trillion. The stock bazaar hit new high scores, thanks to the Fab Seven tech rockstars: Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta, and Tesla.

But behind all the confetti, investors are biting their nails a bit. This rocket ride feels a lot like the 90s internet craze, when web stocks went bonkers before the big faceplant. Most folks think AI will change everything, but they’re also scared that some corners of the market are sizzling too much.

To keep their cash safe, smart investors are dusting off an old trick that helped them survive the dotcom drama. Instead of fighting the AI wave, they’re shifting money into areas that might be next to pop, letting them play along while playing it safe.

Lessons from the Dotcom Circus

Back in the dotcom days from 1998–2000, money managers figured out that arguing with a bubble is a fool’s errand. Betting against web stocks too soon hurt, but sticking around too long was suicide. The champs were those who spotted the next big thing early, ditching pricey stocks for those with room to grow.

Modern investors walk the same strange path. Francesco Sandrini, the boss of many things at Amundi, a big money place in Europe, thinks now feels like 1998. He sees wild market fun, mostly with risky AI bets. But Sandrini isn’t ditching AI. He wants the best new things nobody knows about yet.

He likes computer programs, robot makers, and Asian tech shop spots that might boom as AI gets everywhere.

Mixing Things Up, Staying with AI

It’s hard for investors to skip AI stuff now. Folks think it’s like a huge change, like when cars showed up, for health, schools, cars, and armies. Totally ignoring AI stocks could mean missing big future money.

Simon Edelsten, top money guy at Goshawk Asset Management, says this is like 1999 all over. This could crash hard, he said, because companies are throwing billions around, fighting for a market that’s still just a dream.

He thinks the AI craze will cool, and money will flow from the main giants to places like advice, robots, and parts makers. Edelsten says it’s like a gold rush. When gold is found, he said, buy the store where gold hunters get their shovels.

For him, computer helpers and Japanese robot firms are these shovel stores. They give important tools to the big AI names and might win as AI spending grows.

Staying on the Bubbly Ride

Old stories hint that market bursts could stretch on longer than we guess. Economists Markus Brunnermeier with Stefan Nagel checked hedge funds’ tricks back in dotcom times, saw that most funds didn’t fight the bust. Instead, they danced well, dumping pricey web stocks early, then putting gains into quieter bets.

Between 1998 to 2000, these hedge funds beat the market by some 4.5% each quarter. They ducked big falls by being swift, jumping in quick, then out just as fast.

That trick’s not lost for today’s money pros. There was good money to grab even back in 2000 when the peak showed, Edelsten shared. You just had to move sharp. The same plan fits now. Investors feel the AI party might roll for months or years before calming down, but timing is all.

Chasing the Future AI Stars

This switch-up plan spun some neat fresh trades. Becky Qin, a fund manager over at Fidelity, said her crew’s gambling on uranium. The logic’s clean AI hubs gulp tons of juice, and nuke power might turn vital to feed them.

Likewise, Kevin Thozet from Carmignac said he’s cashing out from U.S. tech stocks, building fresh spots in Taiwan’s Gudeng Precision, a shop that crafts delivery boxes used by AI chip firms like TSMC. This, he said, slips them into the AI chain without inflated costs of major U.S. tech shops.

These steps show folks aren’t ditching AI, just finding slicker ways to stick around. By backing the shops that feed, aid, or juice the AI surge, they could still snag gains while dodging the risk of getting trapped in a fall.

Dangers from Too Much plus Burst Warning Signs

Though cash floods AI, some think it’s growing oddly quick. Building huge data spots fast makes some fret about too much space, like the fibre craze back in the 90s phone biz.

Arun Sai from Pictet said tech shifts always have some goofy parts. He thinks AI is neat, but spots bubble blocks showing up now.

Sai likes China’s tech stocks as a shield. If the U.S. AI thing slows, China’s quick tech jumps could fill in.

Readying for the Sure Slow Patch

Many feel sure they can handle the AI flow, but some are careful. Oliver Blackbourn at Janus said he mixes his U.S. tech with Euro and health stocks. He wants a guard if an AI dip hits the whole U.S. scene.

Blackbourn said it’s hard to guess when the bubble goes bust. We’re in 99 till it pops, he said. That shows how Wall Street feels: happy but jumpy. All want to surf the AI wave, but none want to be last when it fails.

The Tricky Balance Soon

The AI turn has tweaked world trade. It made piles of cash but upped the chance of odd risks. Backers now meet a hard test: stay in the top trend of the era but not get snagged by its wobbles.

To make this happen, folks look back at old stuff from the dotcom times, stay bendy, peep at prices, and act quick. The plan isn’t to guess when the fun stops but to change smart as things change.

Like old stories tell, each big tech jump, like trains or the web, goes through a spin of buzz, growth, and a bit of a tumble. Smart money peeps roll with it, no freak out.
Right now, the AI craze keeps growing. But as prices go way up, it sounds like 1999 all over, a nudge that even the best stuff can make long shadows.