Despite growing concerns over an artificial intelligence (AI) bubble, the recent surge in the Nasdaq 100 still appears far more restrained than the explosive rise seen during the dot-com era, according to LPL Financial chief equity strategist Jeff Buchbinder, as quoted on Yahoo Finance.

Buchbinder noted that comparisons between today’s AI boom and the late-1990s internet frenzy are reasonable. However, the magnitude is vastly different. Since ChatGPT’s debut, the Nasdaq 100 has climbed more than 140%, compared with the staggering 1,090% gain recorded during the dot-com bubble before peaking in March 2000, per the source.

Why This AI Boom Is Different

Buchbinder argued that the current AI-driven rally differs fundamentally from the dot-com bubble in several important ways.

Unlike the speculative funding environment of the late 1990s, today’s AI leaders are largely financing expansion through internal cash flows rather than aggressive capital raising. Their businesses are also more diversified and financially mature.

Valuations appear considerably more reasonable as well. The technology sector traded at roughly 58 times forward earnings at the height of the dot-com boom, versus about 25 times today, the same article revealed.

AI Infrastructure Spending Still in Early Stages

According to Buchbinder, the current AI wave remains heavily focused on infrastructure development, while broader adoption is still in its early stages.

He added that the strong balance sheets of AI infrastructure builders could create opportunities for future AI adoption winners across industries.

Meta led the charge by increasing its 2026 capex outlook to $125–$145 billion (up from a previous $115–$135 billion estimate), citing higher component costs and additional data center investments.

Alphabet also raised its full-year capex forecast to $180–$190 billion (a $5 billion rise from what was expected last quarter, as quoted on Reuters), and expects spending to rise significantly into 2027.

Microsoft followed suit, projecting $190 billion in capex for 2026 (up 61% from 2025, quoted on CNBC).

Any Wall of Worry?

Not everyone is convinced the rally is sustainable. Some strategists have pointed out that hyperscalers are taking on substantial debt to support projected AI-related capital expenditures expected to reach $725 billion in 2026 (read: Big Tech Bets Big on AI Spending: ETFs to Win).

Massive capex will eventually need to be funded through debt as cash reserves continue to shrink. The combined free cash flow of Amazon, Google, Microsoft and Meta is expected to decline a projected $4 billion during the third quarter, the Financial Times (FT) reported recently, as quoted on a source.

The figure is down from an average of $45 billion in each quarter since the pandemic, the report added. These companies’ full-year free cash flow is on track to fall to the lowest level since 2014, when their revenues were around one-seventh of their current size, the FT said citing analysts’ estimates compiled by Visible Alpha, as mentioned on the same source.

Bottom Line

Oxford Economics estimates that global AI spending could jump from $340 billion in 2025 to roughly $3 trillion by 2035, as quoted on the above-mentioned Yahoo Finance article. While debt funding will be needed to support this massive spending, the sheer scale of capex growth highlights the expected demand for AI in the coming years and the potential profitability associated with this technology.

Global spending for the AI infrastructure market is projected to total $1.37 trillion in 2026 alone. The market is dedicated to support Generative AI, with total investment expected to reach nearly $3 trillion by 2028 and over $5 trillion by 2030, per McKinsey and Company.

Hence, investors can consider pure-play AI ETFs and Big Tech ETFs like iShares U.S. Technology ETF (IYW Quick QuoteIYW - Free Report) , Global X Artificial Intelligence & Technology ETF (AIQ Quick QuoteAIQ - Free Report) , iShares Future Exponential Technologies ETF (XT), Global X Robotics & Artificial Intelligence ETF (BOTZ Quick QuoteBOTZ - Free Report) and ARK Autonomous Technology & Robotics ETF (ARKQ Quick QuoteARKQ - Free Report) if they believe the space remains reasonably valued and offers strong long-term growth potential.