The attention AI is receiving on the stock market is growing at an unprecedented pace. Tech stocks have already risen by 40 to 60 percent this year, with leaders like Nvidia and Google, boasting market capitalisations of hundreds of billions of dollars, seeing substantial value increases¹. Investments in AI-related startups worldwide have already surpassed $100 billion this year², reflecting enormous investor confidence but also raising concerns about potential market overheating.

Similar tech developments in the past

Technological breakthroughs have almost always been accompanied by stock market optimism. Take, for example, the railway mania of the 19th century, when new rail lines connected cities and regions, radically speeding up transport. This revolution spurred enormous economic growth but also caused extreme price inflation. When it became clear that not all projects were profitable, the market crashed, leading to widespread bankruptcies and a prolonged recession.

A comparable situation occurred around the turn of the 20th century with the automobile industry. And, of course, there was the dot-com bubble around 2000, when the tech market experienced unprecedented growth. The NASDAQ index rose to more than five times its value within a few years, only to lose almost 77% of its value in less than three years³. Almost all wealth accumulated during that time vanished. This period illustrates how high expectations are often followed by sharp corrections and underscores the importance of maintaining a critical perspective, even during exciting times.

Why we see the same patterns repeated

Investment decisions are driven not only by facts and figures but significantly by human behaviour. Social pressure and fear of missing out (FOMO) cause many investors to follow the crowd. Additionally, confirmation bias plays a role: we tend to seek out information that supports our existing beliefs and are less alert to negative signals. This helps explain why rational warnings often have limited impact in overheated markets.

AI: revolution and risk

New technological advances offer enormous growth potential, but many outcomes remain uncertain. The market often values future earnings and possible success scenarios well above current facts and expectations. This can lead to excessive optimism and a higher chance of corrections, as has been seen in previous technological breakthroughs.

How to navigate this?

Precisely when the market surges, stable business models and healthy cash flows provide protection against sudden price drops. Investing based on these fundamental principles helps avoid speculative risks. This way, investors can seize the growth opportunities offered by technology without getting swept up in the accompanying hype and risks.

Technology remains a crucial driver of economic growth, but it is essential to distinguish short-lived euphoria from sustainable value creation. Not every tech company is the same: financial robustness and stable cash flows determine who will succeed in the long run. For this reason, it is wise to invest in companies with proven business models and sound financial fundamentals. This provides a solid foundation to benefit from innovation while avoiding the risks of overvaluation.

¹ Best Tech Stocks to Watch in August 2025
² AI Funding: 33 US Startups Cross $100M+ Investment in 2025 - AI CERTs News
³ The Late 1990s Dot-Com Bubble Implodes in 2000 | Goldman Sachs