Television commentator Jim Cramer says the selloff in AI-related stocks likely has further to go, but he argues it does not resemble the dot-com crash because most of the hardest-hit companies are still profitable.
Market view · Jim Cramer
AI Selloff May Have Further to Go, But Profitability Sets It Apart From the Dot-Com Crash
Cramer argues the decline in AI-linked stocks could be a prolonged correction. Unlike the late-1990s internet bubble, he says most of the hardest-hit companies are still profitable.
Two eras, one key difference: earnings
Late-1990s internet bubble
Many internet companies had little or no earnings
Revenue was often speculative
Share prices collapsed in 2000
Today's most affected AI-linked names
Generally still generate profits
Not, for the most part, unprofitable startups
Prices may still fall further
The question for investors: does profitability hold?
Two paths from the current selloff, depending on earnings
Starting point
Profitable AI-linked companies sell off
→
If earnings hold up
Market is repricing growth expectations, not questioning the businesses
If earnings weaken
Comparison to earlier bubbles becomes harder to dismiss
What investors must weigh
Profitability may be a cushion, but it is not the only factor.
Valuations
The levels these stocks carried before the selloff
AI spending pace
How quickly large customers keep spending on AI
Earnings trajectory
Whether profits hold up as the correction continues
Continue reading The rest of this article is for AI News Blitz readers. Choose an option below to keep reading.
Already purchased? Sign in ✓ Signed in — this article isn’t included in your current plan.Unlocking the full article...