An analysis by Freedom24 concludes that the current cycle differs profoundly from the dot-com bubble due to the profitability of its leaders, but warns that the sustainability of demand and the monetization of AI will be the variables that determine whether current valuations are justified
The rise of artificial intelligence has reopened one of the most recurring debates in financial markets: are we facing a technological revolution comparable to the internet or a new speculative bubble?
According to an analysis by Freedom24, the European broker specializing in investment and savings, although there are evident parallels with the dot-com era, the fundamental differences today are more relevant than the similarities.
The study concludes that current valuations in the technology sector are above their historical averages, but remain far from the extreme levels observed during the dot-com bubble of 2000. Furthermore, it highlights that the companies leading the artificial intelligence revolution today exhibit much higher levels of profitability, cash generation, and financial strength than many companies that were at the forefront of the stock market euphoria of the late nineties. At the same time, it warns that the big unknown remains the sector's ability to transform current enormous investments into sustainable long-term revenues.
Currently, the Nasdaq-100 is trading near all-time highs, while NVIDIA has surpassed 4 trillion dollars in market capitalization. In parallel, Google, Amazon, Microsoft, and Meta plan to jointly invest around 725 billion dollars in artificial intelligence and associated infrastructure during 2026.
However, for Freedom24, the main difference compared to the year 2000 lies in the quality of the companies leading this cycle.
The so-called Magnificent 7 exhibit levels of profitability, cash generation, and financial strength far superior to those observed during the dot-com bubble. NVIDIA, for example, closed its fiscal year 2026 with revenues close to 216 billion dollars and year-on-year growth of 65%. In contrast, many of the companies that led the dot-com euphoria lacked recurring profits or even sustainable business models.
Freedom24's opinion
"The comparison with dot-coms is understandable, but I think it can lead us to ask the wrong question", states Pedro Santa Cruz, director of Freedom24 Iberia, S.L. (a tied agent of Freedom Finance Europe Ltd. in Spain).
"At the end of the nineties, there were companies with real businesses and others that were listed on pure promise. Today, there is also a significant part of expectation, but the dominant problem is different. A good part of artificial intelligence services are sold below their production cost, financed with investor capital to gain users and market share. And that complicates the reading: we don't know how much of this demand would still be there if the customer paid the real price."
According to Santa Cruz, the main challenge for the coming years will not be to determine if there is a bubble, but to check what part of the expected growth can be translated into sustainable profits.
"I would not expect a collapse similar to the year 2000. I find a gradual moderation more likely as certain implicit subsidies disappear and prices approach their real cost. The question I ask myself as an investor is not whether there is a bubble, but how much of this demand is genuine and who will absorb the difference if it ends up being less than what the market takes for granted."
The analysis also identifies some factors that justify a certain prudence. The ten largest companies already represent about 40% of the S&P 500 capitalization, a level higher than observed during the dot-com era. Furthermore, large technology companies could jointly exceed one trillion dollars annually in infrastructure investments as early as 2027, while startups linked to artificial intelligence concentrated more than half of all global venture capital financing during 2025.
For Freedom24, the current scenario cannot be simply defined as either a bubble or growth fully backed by fundamentals. Technology leaders have solid and profitable businesses, but the magnitude of investments requires that the monetization of artificial intelligence continues to accelerate in the coming years.
Therefore, the key question for investors is no longer whether AI constitutes a bubble comparable to that of 2000, but how much future growth the market is discounting today and which companies will be best positioned to capture that value when investors demand tangible returns.