Investors Use Dot-Com Era Playbook to Dodge AI Bubble Risks

Major investors—spooked by AI exuberance yet wary of betting against it—are shifting from hyped-up stocks into potential next-in-line winners, reviving a strategy from the 1990s dot-com era that helped some sidestep the crash, Naomi Rovnick reported for Reuters.

Professional investors have been trying to find ways to profit from the AI-driven bull market while avoiding excessive risk.

As U.S. stocks have hit successive records and AI chipmaker Nvidia’s valuation has surged beyond $4 trillion, professional investors have been trying to find ways to profit from the bull market while avoiding excessive risk.

Some are looking back to the 1990s internet boom, which spread from startups to telecoms and tech, where hedge funds rode the wave by exiting highly valued stocks before they peaked and shifting into others that still had room to rise.

“What we are doing is what worked from 1998 to 2000,” said Francesco Sandrini, multi-asset head and Italy CIO at Europe’s largest asset manager, Amundi.

He pointed to signs of irrational exuberance on Wall Street, such as frenzied trading in risky options pegged to the share prices of big AI stocks.

But Sandrini said he expects the new tech enthusiasm to continue and hopes to bank gains through bets on reasonably valued assets that may rally next.

He said this involves finding “the highest growth opportunities that so far the market has failed to spot,” including moves into software companies, robotics, and Asian tech.