The most common framework used to interpret the current development of artificial intelligence is the comparison with the dot-com bubble: a cycle of speculative enthusiasm in which a real and transformative technology is anticipated by financial markets to such an extent that excessive valuations emerge, followed by a sharp correction.
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However, this interpretation assumes that the primary driver of innovation remains the same as it was then: direct economic return, measured by markets operating in a relatively neutral environment.
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That assumption may be incorrect for the historical phase we are entering.
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1. The Dot-Com Era: Innovation Without Systemic Global Competition
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The dot-com bubble developed in a very specific context: the end of the Cold War, unipolar American dominance, and the absence of a strategic global rivalry comparable to the one that had previously existed.
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The Soviet Union had already collapsed, China was still an emerging power, and American leadership was not structurally challenged.
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In this environment, the Internet was a revolutionary technology, but its development and adoption were largely left to market forces. As a result, valuations reflected primarily expectations of future profitability rather than a broader strategic necessity.
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When those expectations exceeded economic fundamentals, the system corrected itself, leading to the collapse of the dot-com bubble.
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2. The Cold War: Innovation Driven by Geopolitical Competition
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During the Cold War, the logic was fundamentally different. Innovation was not merely an economic tool but a direct instrument of strategic superiority.
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The space race is the clearest example. Economic return was not the relevant criterion. The value was geopolitical, military, and symbolic. Technological progress was pushed beyond traditional economic fundamentals because the ultimate payoff was supremacy between competing blocs.
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In such a framework, markets do not determine the "correct" price of innovation. States actively accelerate and direct technological advancement.
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3. The Present: The Return of Systemic Competition
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The current era resembles the resurgence of great-power competition far more than it resembles the globalization period that followed the Cold War.
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Artificial intelligence is not simply an economic infrastructure. It is a technology with direct implications for defense, intelligence, cybersecurity, industrial productivity, and national power.
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For this reason, the United States, China, and other major actors are not leaving the process entirely to market dynamics. Instead, they actively shape it through industrial policy, regulation, strategic investments, and national initiatives.
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The logic once again becomes strategic: not merely maximizing short-term profits, but ensuring that a nation does not lose the technological race.
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4. Consequence: Valuations May Reflect Geopolitical Value
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If this interpretation is correct, then the comparison with the dot-com bubble becomes incomplete.
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In the dot-com era, markets primarily priced expected future earnings within a relatively free competitive environment.
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Today, markets may also be pricing a different variable: the probability that a country wins the global technological competition.
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As a result, part of the valuation of AI-related companies may reflect not only expected cash flows, but also their role as indirect instruments of national power.
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This would imply that:
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• The gap between winners and losers will become significantly larger.
• Companies located within the leading technological power may justify structurally higher valuation multiples.
• Some valuations currently considered excessive may, in fact, be rational within a geopolitically competitive framework.
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Conclusion
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The limitation of the dot-com comparison is not that it ignores the possibility of speculative excess.
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Rather, it overlooks the fact that the current system is not purely economic.
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Artificial intelligence is not merely a market technology. It is a power technology.
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And when a technology becomes a strategic asset in a competition between great powers, its value is no longer determined solely by economic fundamentals, but also by the logic of geopolitical rivalry.