The AI market is facing a warning from professor Erik Gordon, who predicts that the boom will end in a “dwarf” crash similar to the dot-com bubble. According to Gordon, AI startups such as CoreWeave are putting investors at risk for even greater losses than those experienced during the dot-com era.
Gordon’s concerns come after Nvidia-backed CoreWeave saw its shares plummet 33% over two days, wiping out $24 billion in market value. The company’s latest earnings showed widening losses and infrastructure constraints, making it clear that the AI boom is losing steam.
The professor notes that CoreWeave’s collapse is almost 60 times larger than the peak market cap of Pets.com, a dot-com company that filed for bankruptcy within a year. This stark contrast highlights how investors could lose significantly more in an AI bubble bursting.
Gordon also warns that sudden and significant losses can be devastating to shareholders. The AI boom has already seen many tech titans make up a large chunk of the US stock market’s value, leaving them vulnerable to market fluctuations.
While some experts disagree with Gordon’s warnings, others acknowledge the risks associated with investing in the AI sector. As the market continues to grow and mature, it’s essential for investors to be aware of the potential pitfalls and take necessary precautions.
Source: https://www.businessinsider.com/erik-gordon-ai-stocks-dot-com-bubble-crash-tech-market-2025-8